ASSET FINANCE COMPARISONS

Rental

Lease

Cash

VAT

VAT claimed monthly

VAT claimed monthly

VAT claimed upfront

INTEREST

Interest calculated on cash price before VAT

Interest charged on top of VAT

Interest lost over period as cash paid upfront, that could have enjoyed an interest return of it’s own

TAXATION

100% tax deductible

Interest portion tax deductible

Deductible by depreciation via balance sheets annually

IMPACT ON
BALANCE SHEET

Operating expenses in the Income statement
Not governed by budgets

Appears in the financials as an asset Governed by the company budgets

Appears in the financials as an asset Governed by the company budgets

CAPEX

No Capex approval required
No deposit required

Capex approval required for purchases of equipment. Usually must pay deposit

Capex approval required for purchases of equipment
No deposit required

IMPACT ON RATIOS

Improves Equity Ratios, Current Ratios and Return on Asset Ratios in financial ratio analysis

Has to be capitalized

Has to be capitalized

SOFTWARE

Software installation and control cards can be included

Can only finance actual equipment

N/a

UPGRADE OPTION

Upgrade option available free of additional VAT on original equipment

Upgrade option available but all VAT on original equipment is paid

Very little / no value is attached to trade-in “2nd hand” equipment after a period of ± 3 years & therefore capital would effectively be lost when new equipment is purchased; thus no return on capital would be recognized

RENTAL OPTIONS

Rentals can be tailored to your individual needs – flexible (12/24/36/48/60 months)

No escalations available

N/a

EARLY TERMINATION

By negotiation at Technofin’s discretion

N/a

N/a