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)