Intuit Technologies is able to simplify your technology finance needs with simple, flexible options from a multitude of vendors. Some of the benefits of utilising finance are as follows:

Benefits of Finance - Benefits to the Client

The major reasons why you may choose finance for your equipment acquisition include:

No Capital Outlay

The finance option requires no initial capital expenditure. By conserving capital, financing can enable funds to be better utilized in the running of your business and can also free up capital for investment purposes. Financing options require only a monthly outlay rather than a major single outlay. Financing can also provide an extra source of credit that leaves existing lines of credit unaffected.

Flexible To Suit Customer Needs

Financing can usually be catered to your specific needs whether it is via lease, rental or hire purchase. Structured payments can also be organized, for example paying quarterly, half yearly, annually or up front payments. The budgeting process is also simplified as financing guarantees a fixed payment for a specified term.

Tax And Accounting Benefits

As long as the equipment in used for business purposes, tax deductions are available. Under a hire purchase, the depreciation of the equipment and the interest component of the agreement are tax deductible. Under a lease and rental, the monthly instalments are tax deductible.

As rentals are treated as an operating expense, they may qualify as off balance sheet financing. This results in avoiding the equity accounting calculations that is applicable to other forms of finance.

Multiple Options At End Of Term (Rental Option)

Subject to the terms and conditions of the rental agreement, at the end of the rental term you may choose from various options such as:

Upgrade the equipment.
Extend the rental contract to rent the equipment at a discounted rate over a nominated term.
Continue to rent the equipment on a month-to-month basis.
Sell back the equipment at agreed value.
Return the equipment with no residual obligation.

Inflation Protection

If you choose to purchase the equipment, you would outlay the full cost of equipment at today's dollar value. Over the life of the equipment, a portion of this cash outlay is "recovered" by depreciation. As a result of inflation, the dollars recovered through depreciation are continually decreasing in value.

Avoid Costs Of Ownership

The rental option allows you to acquire the equipment without incurring the costs of ownership. As the rental company is the owner of the equipment, they assume the risk of obsolescence. The renter need not worry about trying to re-sell old equipment. Some clients find themselves effectively becoming a second-hand equipment dealer when up-grading. The rental option avoids the time consuming costs of attempting to recover lost values.

Benefits of Finance – Comparison:

Rental Lease Outright Purchase
May qualify for off Balance Sheet reporting. Needs to be shown on the Balance Sheet as both an asset and liability. Needs to be shown on the Balance sheet as an asset, showing the reduction in cash reserves or increase in liability in overdraft.
Simple accounting if the equipment is 100% for business use then the payment is 100% tax deductible More complex accounting maybe required. Equity accounting as per AAS17 may be necessary. Yearly accounting requirements of calculating the depreciation on the asset and the relative balance sheet adjustments will be required.
Preserves Working Capital. Paying a monthly rental on the asset as it is used to earn income Preserves Working Capital. Paying a monthly rental on the asset as it is used to earn income. Reduces Working Capital. Having to pay completely for the asset today.
No residual value liability. Residual value liability. No residual value liability.
Flexibility to upgrade to new technology anytime during the period of the agreement (certain criteria applies) through a simple variation of the contract. Contract has to be paid out in full if the client is wanting to upgrade to new equipment. To upgrade to new technology the client would need to trade in or write off the old equipment and then find the funds to purchase new equipment.
Flexibility to add on options and/or upgrade components of the equipment during the period of the agreement through a variation of the contract as above. Not flexible. Any add ons would have to be financed or paid for separately from this contract with possible complications of ownership. If a component of the lease needed to be upgraded, the entire lease would probably need to be paid out. Add ons and upgrades will be paid for in full by the client, which again reduces working capital.
Maintenance, software, installation and other intangible items can usually be included. Normally for hardware items only. Any intangible items will probably require a cash payment by the client. Client pays cash. Reduction in working capital again.
Reduces risk of equipment obsolescence with ability to upgrade. Risk of obsolescence. Risk of obsolescence.
Flexible end of term options. Minimal end of term alternatives.  
GST paid with your payments can be claimed on your Business Activity Statement GST paid with your payments can be claimed on your Business Activity Statement.  

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