|
Leasing vs. Buying – Corporate Finance
|
| An issue that needs to be considered right at the beginning of any decision to purchase assets is whether to buy or lease them. If you decide to buy, then also consider use of debt to finance the purchase.
Ideally, businesses should only buy appreciating assets and lease depreciating ones. Buying is best if you will be able to make use of the asset for longer than what the ‘rental’ period would cover. However, if buying the asset would deplete the company’s cashflow, then buying becomes unattractive.
Further, if cashflow is not adequate and working capital is critical, then financing the asset purchase using debt must be considered.
Asset finance can be considerably complex and any mistakes made in choice of available options can cost the company in terms of profitability as well as balance sheet strength.
The most important forms of asset finance are:
· Installment sale – (also know as Hire Purchase), refers to a credit agreement in terms of which goods are sold by the bank to a customer over a negotiated period of time, agreed interest rate and installments of periodical payments. Ownership of the goods or assets pass to the customer after payment of last installment (suitable for M/Vehicles, Furniture & Fittings and Equipment)
· Rental – (Operating Lease), provides the customer with uninterrupted use of an asset, rather than ownership (suitable for computer equipment, photocopiers and fax machines, generally assets which are replaced on a regular basis)
· Finance Lease – Like with Operating Lease, provides the customer with uninterrupted use of an asset, rather than ownership. The customer has the option to take ownership or return the asset to the bank at the end of the period. Difference compared to Rental mostly lie in the treatment of VAT (balloon and stepped up payments can be arranged to suit customer company cashflow.)
|
More in this category:
IABC Operating Timelines Amid Safety Concerns | IABC Group »
Business Rescue – Changing the Landscape of Business Advising in South Africa »
Salary payment still best option for business owners »
Sars’ revenue collection increases by 6.3% y/y, but misses Treasury target – This Could Only Mean One Thing for Tax Payers »
Impact of the Vat Change Effective 01 April 2018 on Transactions »
Value Added Tax (VAT) from 14% to 15%, effective 01 April 2018 »
Job disruption is coming to accounting too »
»
HIGH LEVEL SUMMARY OF PERSONAL TAX CHANGES ARISING FROM THE 2018/19 BUDGET SUBMISSION »
IABC – NOW A GOLD LEVEL SAGE RE-SELLER FOR SAGE PRODUCTS »
How Compliant is your VAT Administration? »
2012 Tax Season is Open »
Regulation Of Tax Practitioners »
Softline Pastel Accounting & Payroll »
IABC – Now an Accredited Pastel Evolution Business Partner and Approved Training Centre (“ATC”) »
IABC – APPROVED TRAINING PARTNER »
the dti RECOMMENDS 01 MAY 2011 AS IMPLEMENTATION DATE FOR THE NEW COMPANIES ACT »
Tax compliance, obstacles encountered by small and medium enterprises in South Africa »
Audit vs. Independent Review for Companies »
POTENTIAL RISKS WHEN BUYING A BUSINESS – BUSINESS DEVELOPMENT »
Security around VAT Registrations and administration – Taxation »
ENTERPRISE RISK MANAGEMENT »
2011 Message from the MC »
SEVERE NON-COMPLIANCE PENALTIES – (Taxation) »
Importance of Sound and Effective Business and Financial Controls – Enterprise Risk Management »
OUTSOURCING – Business Management »
Financial and Other Economic Indicators »
96 Comments
I appreciate your site and will subscribe to your rss feed so I can read anytime. Wonderful information,2
I am glad you appreciate our content. What would be of even greater help to us is for you our readers to share with us your experiences in your business/ career journeys as nothing can ever replace experience.
We will be refreshing articles at least weekly from first week of December, it’s normally a challenge from the perspective of time as we also have to manage day to day client engagements and business/ pravtice admin.
Mwendabai
Thanks for your marvelous posting! I quite enjoyed reading it, you may be a great author.I will make certain to bookmark your blog and will eventually come back down the road. I want to encourage yourself to continue your great job, have a nice weekend!
I really appreciate that feedback. Especially that firstly, writing doesnt come naturally to me, am a chartered accountant by profession. However my passion to develop and support small to medium size businesses motivated me to come up with a channel to communicate and educate the business community. What would be of even greater help to us is for you our readers to share with us your experiences in your business/ career journeys as nothing can ever replace experience.
We will be refreshing articles at least weekly from first week of December, it’s normally a challenge from the perspective of time as we also have to manage day to day client engagements and business/ practice admin.
Howdy! I know this is somewhat off topic but I was wondering if you knew where I could locate a captcha plugin for my comment form? I’m using the same blog platform as yours and I’m having trouble finding one? Thanks a lot!
Hai. I wish I had that information. Not much of a technical IT person. We have professional developers who have developed and manage out site except for content.
Mwendabai
It’s great that banksters Credit Suisse have been fined for their wrongdoings – but why hasn’t anyone gone to jail? A bank is in the business of money itself so fining them means nothing; they can recover the fine in many ways from their clients. Bang them up though and it’ll actually hurt them. We need to see punishment that means something to the banks, for all our sakes.
Let’s just call it the irony of world Justice>
Between me and my husband we’ve owned more MP3 players over the years than I can count, including Sansas, iRivers, iPods (classic & touch), the Ibiza Rhapsody, etc. But, the last few years I’ve settled down to one line of players. Why? Because I was happy to discover how well-designed and fun to use the underappreciated (and widely mocked) Zunes are.
I have to agree with you and the remarkable logical threads of reasoning really have radically turned my world upside down and therefore I must say that in my life I have never experienced anything like this I have to say that never before have I or anyone else seen such an enlightening bit of writing I have to say that really never before in the history of existance have I read something so amazing and informative I am just a normal psychotic female that has a that has a stupid brain and and I’m completely sure that untill I will reach the day of my death I’ll never ever be as sharp as you and I’m really confident that an avarage individual like me will never be able to compose anything as smart and witty as what you just have written What my note truly contains is that your insights about commerciality are just to much for me and that I basically couldn’t ever produce a thing so wonderful What you did here is just outstanding In my whole life, in which I worked in the business market for years and years I have never ever read something so unusual and sensible I mean I started working as an used car salesman and I really worked my butt off yet my hard work never amounted to anything Nonetheless your wonderful post has given me an fantastic burst of inspiration Finally I have the strength to improve my life for the better I can now promise to myself that I will stop being a rotten dirty thief and sellout, and that I can attain something good in my life and that the doors to success are not closed down for me, and I can really achieve something great in my life I can now stop thinking of myself as a dirty piece of trash and I can finally live my life to the max and I have only you to thank for it Really this post has been a lifesaver If you think I kind off bable right now and that my post isn’t really related to what you have published you should realize that I am under the influence of some fairly strong prescription drugs. Including but not limited to: prosac , opium, marihuana, and sugar . Your post has inspired me so much that I will watch this site twenty four hours a day and if for some strange reason (I could never imagine why you would ever do that, but oh well) you would not approve or delete this comment I would most likely kill myself , I have attempted it many times before, as is expected from a shit pig like me, who could never be compared to your greateness
I really appreciate that feedback. Especially that firstly, writing doesnt come naturally to me, am a chartered accountant by profession. However my passion to develop and support small to medium size businesses motivated me to come up with a channel to communicate and educate the business community. What would be of even greater help to us is for you our readers to share with us your experiences in your business/ career journeys as nothing can ever replace experience.
we will be refreshing articles at least weekly from first week of December, it’s normally a challenge from the perspective of time as we also have to manage day to day client engagements and business/ prcatice admin.
Mwendabai
Hi! I understand this is somewhat off-topic but I needed to ask. Does operating a well-established website like yours take a large amount of work? I’m completely new to running a blog but I do write in my journal every day. I’d like to start a blog so I will be able to share my personal experience and thoughts online. Please let me know if you have any recommendations or tips for new aspiring bloggers. Thankyou!
To be honest, it does. We are not a very large company, I actually started this operation in June 2009, as such we cant afford a full time developer/ manager however we outsource many aspects especially the development, we research and publish articles ourselves.
Mwendabai
Have you tried SEOPressor? It’s definetly the best SEO plugin for wordpress. I use it on my blogs and I am now getting hundreds of visitors daily to my blogs – it’s fantastic!
I am not so sure how it works exactly, am just an accountant, but let me search for it, you can send me details. mkalaluka@iabcgroup.co.za
Appreciate it for the fantastic page!I absolutely liked each and every part of it.I’ve you favorited to find out more content you page!
Many thanks for the postive feedback, we havent been able to publish as many articles as we also caught up in day-to-day client engagements and internal admin, however, going forward we will ensure, at the minimum, weekly updates, and this will be with value adding business information researched and summerised for our readership.
Mwendabai.
Fascinating blog! Is your theme custom made or did you download it from somewhere? A design like yours with a few simple tweeks would really make my blog jump out. Please let me know where you got your design. Appreciate it
I think its a combination of both. We outsourced the development to a professional services firm who played a lot with the designs and then we got to make final choice and made a few customization requests.
Mwendabai
First off I want to say fantastic blog! I had a quick question that I’d like to ask if you don’t mind. I was interested to find out how you center yourself and clear your mind prior to writing. I have had a difficult time clearing my mind in getting my ideas out. I truly do enjoy writing however it just seems like the first 10 to 15 minutes are lost just trying to figure out how to begin. Any suggestions or hints? Thank you!
Wow! That’s a difficult one coz every mindset/ mind make up is different. I remember while still studying, had friends who could never read anything on the day of writing as it would clog their minds, me on the hand will be reading until I enter the exam room door. The best would be for you to explore and find what works best for you.
Mwendabai.
Hey, I am recent to your writings and I surely understand the friendly articles . and wonderful layout. You’re a great blogger!
Thank you. This is mostly driven by my interaction with our clients and you eventually realise, you all havent been to same school and learning path, so technical jargon doesnt help much and simplicity is king as it’s more convenient way to communicate.
Mwendabai.
Excellent blog! Do you have any helpful hints for aspiring writers? I’m planning to start my own site soon but I’m a little lost on everything. Would you recommend starting with a free platform like WordPress or go for a paid option? There are so many options out there that I’m totally overwhelmed .. Any recommendations? Cheers!
Hi. Many thanks, I actually havent thought of that before. I am not a natural writer myself. Am a chartered accountant and accountancy is what am naturally good at, however, this is important as well as it’s a channel we communicate and educate the business community.
Mwendabai
Good day! I could have sworn I’ve been to this site before but after checking through some of the post I realized it’s new to me. Anyhow, I’m definitely happy I found it and I’ll be bookmarking and checking back frequently!
Sorry to bother but if you’re not using SEOPressor then you are really behind. It’s easily the best plugin out there for WordPress. Try it here and see for yourself: SEOPressor plugin.
Hi, I come acoss this writing by Google search engine. figured I should take a look around. I read few content on this website. Look forward to checking out your some of your posts again.
Wow what a nice webpage,I’ve learned a lot from your blog here, And I may come here Often, Keep on going,my friend, Thanks
Really impressed! Everything is very, very clear, open is a description of the problem.It contains the information.I wanted to let you know that I linked to your site with a dofollow links so visitors can come to see your blog.It is all very new to me and this article really opened my eyes,and I guess since I like reading your blog, others will too.You can find the link to your site here:
Many thanks for posting this entry. It is really helpful for me.
You are welcome, there are a few more coming up in 1st week of December. Your feedback is important as it guides us in terms of what we should research on and publish as this has to be relevant to the readers.
What would it take to for me to create a blog like yours? I found your blog on Bing
I am actually not so sure, we employed web developers to develop this site and the blog was part of the scope.
I Know your from other site search engine. figured I should take a look around. I read few content on this website. Look forward to checking out your some of your posts again..
Thanks please feel free. We try to provide value add business information as much as possible. Its difficult from the time management point of view as we have to alos attend to our clients and projects on a day to day basis.
One thing is one of the most prevalent incentives for using your cards is a cash-back or even rebate provision. Generally, you get 1-5% back in various acquisitions. Depending on the card, you may get 1% back again on most acquisitions, and 5% back on acquisitions made at convenience stores, gasoline stations, grocery stores and also ‘member merchants’.
Thanks for posting this. That’s the most full post I have found about this.
I am glad you founf it useful. We can give you additional information if you so require it. We try to make these posts as short as possible as manyy business people are just too busy to read a full page of information. So we aim to highlight main points and information in the most summerised fashion.
Some writers write the same old information in their articles by changing the words around, but that’s not very original. You’re content is truly original. http://www.samsung1080phdtv.net/
We really appreciate the positive messages, these are what keeps us pushing ahead for even fresher, well researched and relevant business articles.
Mwendabai
Hey there would you mind letting me know which webhost you’re utilizing? I’ve loaded your blog in 3 different browsers and I must say this blog loads a lot faster then most. Can you recommend a good internet hosting provider at a reasonable price? Cheers, I appreciate it!
To be honest, am not sure, am responsible for the professional content, our technical team deals with the technical side of the site.
Mwendabai.
This is a really great blog. Thx to the auther
I’m very sure you not revealing something here, sorry to say, but would further detail a little bit?
I can arrange for a more detailed version of the article for you. We find that often people dont have the time for long artciles and they easily would lose the core message so we summarise it in simplest form there is so us to effectively get the message across.
Mwendabai
cool story bro
Your new post seems quite interesting,We have spotted this my delicious and stumble account.The idea you are making is quick to are very conscious and functional.
Love your blog!
I like Your Article about Leasing vs. Buying – Corporate Finance Perfect just what I was looking for! .
We glad you enjoyed it.
Mwendabai.
Wohh precisely what I was searching for, regards for putting up.
Great post! Are there any pespectives that you may be capable to divulge to be able to justify your last part a little amount further? many thanks
I will try to email you detailed article, what we do is to summarise these as we know business owners/ managers and the general readership at large have very little time, so we give them bullet points just enough for us to get the message accross.
Mwendabai
I’m really enjoying the design and layout of your site. It’s a very easy on the eyes which makes it much more pleasant for me to come here and visit more often. Did you hire out a developer to create your theme? Fantastic work!
Yes we did, design was done by black envelope design studio and maintenance done by Imbali, we just manage the professional content.
Mwendabai.
If I lease out a computer to a company for one year, they purchase software on the computer, and then return the item back to me, would the software be registered under the company that rented the equipment or me? Specifically, if the software in question is licensed to the corporation?
Also, what about program updates? What types of programs would the leasing company be able to put on the equipment? What kinds of alterations could be made?
Both companies do business in California.
Thanks!
Exam Help Please!!!!!!!!
ok value of computer equipment deprecate rapidly. a solution to this is leasing the computers are there any other options apart from buying the computers
|I work for a start-up company that is opening up distributors/retailers across the US and we need to provide them with computer equipment. The company would like to ‘team-up’ with a computer leasing company that will lease equip to all of our locations. The location is not important since they will be shipping the equip, but they must be able to service every state in the country.
|I am able to find leasing companies that will work with me if I owned a business, however I am looking for one that will give me a lease so that I can get my own computer.
|What are the feature for leasing [computers and etc] and how you demonstrate it?
I can’t think of how to demonstrate some of these key features.
For example, how would you demonstrate that leasing save your money and have better cashflow for your business.
|One morning, the computers at U.S. Leasing became sluggish. Computer operators were relieved when a software troubleshooter from IBM called several hours later. They were more than happy to let the troubleshooter help them correct the problem. The troubleshooter asked for a phone number for the computers as well as a logon number and password.
The next morning, the situation worsened. A call to IBM confirmed U.S. Leasing’s suspicion—someone had impersonated an IBM troubleshooter to gain unauthorized access to the company’s system and destroy the database. U.S. Leasing was also concerned that the intruder had devised a program that would let him access the system again even after all of the passwords were changed.
Answer the following questions:
What are the possible system weaknesses at U.S. Leasing that allowed the imposter to penetrate its internal security system?
What techniques might the imposter have employed to breach U.S. Leasing’s network?
How can U.S. Leasing avoid these types of incidents in the future?
|i really need a gaming one and dont wana pay a chunk at once. so is there a place in toronto that leases/rent comps?
||I see allot of refurbished/off lease desktops for sale on the web. Are they any good for the usual home use ? Storing pictures,listening to music,web browsing.
http://leasingcomputers.blogspot.com
How you shown this particular matter here is definitely absorbing as well as properly composed. In my opinion you will easily acquire massive amount readers.
Thanks for your write-up. My site Buy Viagra
Interesting read, cheers! I finally view the large image .
Found your website on Google and I need to say that I wholly enjoyed reading it. Many thanks My site Buy Viagra Online
Apple now has Rhapsody as an app, which is a great start, but it is currently hampered by the inability to store locally on your iPod, and has a dismal 64kbps bit rate. If this changes, then it will somewhat negate this advantage for the Zune, but the 10 songs per month will still be a big plus in Zune Pass’ favor.
Hello are using WordPress for your blog platform? I’m new to the blog world but I’m trying to get started and create my own. Do you need any html coding expertise to make your own blog? Any help would be greatly appreciated!
Currently it seems like BlogEngine is the best blogging platform out there right now.
(from what I’ve read) Is that what you’re using on your blog?
I’ve been surfing online more than 3 hours today, yet I never found any interesting article like yours. It’s pretty worth enough for me. In my view, if all webmasters and bloggers made good content as you did, the net will be a lot more useful than ever before.
I as well as my guys have been going through the good tips and hints found on the blog then all of the sudden got a horrible feeling I had not thanked the site owner for those tips. These guys are already consequently passionate to read all of them and have now surely been loving these things. Appreciation for genuinely so thoughtful and also for pick out some high-quality useful guides millions of individuals are really desperate to discover. Our sincere apologies for not expressing gratitude to sooner.
I really like your blog.. very nice colors & theme. Did you make this website yourself or did you hire someone to do it for you? Plz respond as I’m looking to design my own blog and would like to find out where u got this from. appreciate it
I have been reading out a few of your posts and it’s pretty clever stuff. I will definitely bookmark your site.
hey there and thank you for your information – I’ve certainly picked up anything new from right here. I did however expertise a few technical issues using this web site, since I experienced to reload the site lots of times previous to I could get it to load properly. I had been wondering if your hosting is OK? Not that I’m complaining, but slow loading instances times will often affect your placement in google and could damage your high-quality score if ads and marketing with Adwords. Well I am adding this RSS to my email and can look out for a lot more of your respective fascinating content. Make sure you update this again soon.. Evelin
Hi, I do think your site might be having browser compatibility issues. When I look at your website in Safari, it looks fine but when opening in Internet Explorer, it has some overlapping issues. I just wanted to give you a quick heads up! Other than that, fantastic blog!.
I’ve been exploring for a bit for any high-quality articles or blog posts in this kind of house . Exploring in Yahoo I finally stumbled upon this website. Reading this info So i’m happy to exhibit that I have a very excellent uncanny feeling I discovered exactly what I needed. I most definitely will make certain to don?t fail to remember this website and give it a look on a relentless basis..
Definitely, what a splendid blog and instructive posts, I definitely will bookmark your website.Best Regards!
I gave you a link back on one of my pr5 pages, I hope this is ok.
How can i enter the contest,We would like to see New zealand….
Hi there, simply changed into alert to your weblog thru Google, and located that it is really informative. I am gonna be careful for brussels. I will appreciate for those who proceed this in future. Many people might be benefited from your writing. Cheers!
I gave you a link back on one of my pr5 pages, I hope this is ok.
I have read a lot of your site content now and I thought I would come up with a opinion and go ahead and claim that you post stunning material in this article. Saved to fav this fabulous website a long time ago and have been here for a bit. Again, many thanks for making this all shareable for the public.
sup superb blog dude, i think you hav put your point across excellently thanx
You have a lot of useful pointers on this site. This is a well composed article that I have bookmarked for future reading. Have a fun.
This is a message to the website owner. Does your website get enough traffic or rank for search terms on Google? Well we can help! We can provide you with a safe tiered link building system! This will help your rankings on Google and make your website more visible to your target audience. Take a quick look as I am sure you will be interested.
It is highly helpful for me. Huge thumbs up for this website post!
I am continuously browsing online for articles that can help me. Thank you!
Very nice style and fantastic written content , very little else we want : D.
Thank you for the auspicious writeup. It in fact was a amusement account it. Look advanced to far added agreeable from you! However, how can we communicate?
I think you have noted some very interesting details , thanks for the post.
This is a interesting topic, thank you for taking the time to make such a wonderful site. Another good site that I have found recently is .excellent one to check out.
Incredibly great article it is in fact critically. We???ve been awaiting for this data.
Hey there, You have done an incredible job. I will definitely digg it and personally recommend to my friends. I’m confident they’ll be benefited from this site.
I like this web blog very much so much superb information.
Hi there, just became alert to your blog through Google, and found that it is really informative. I am gonna watch out for brussels. I’ll appreciate if you continue this in future. A lot of people will be benefited from your writing. Cheers!
Great site you got here i will be back for more.
Bookmarked this web site and put in your RSS feeds to my smart phone, enjoyed this content good deal man! Many thanks for a wonderful submit and an all-around interesting weblog!
Aw, this was a extremely nice post. In thought I want to put in writing like this moreover ?taking time and actual effort to make a extremely great write-up?nevertheless what can I say?I procrastinate alot and definitely not appear to get one thing done. 560732
Very interesting article, has long sought information on: Leasing vs. Buying – Corporate Finance . Thank You.
hooray; your writings on theater and writing much missed!
Very nice idea!