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
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