CAPE TOWN – IT Asset Disposition specialist company Xperien is moving into the equipment rental space. The company has partnered with independent financial services company Merchant West to provide blue chips and Government with a fresh line of alternative funding to reduce the cost of IT assets.
The partnership offers a full end-to-end IT Asset Lifecycle solution for corporates – from acquisition to financing, management and disposal. Merchant West will structure a finance deal that reduces total usage cost of any IT asset and now offers finance options that have no impact on existing funding from other financial institutions.
The tough market conditions and increasing capital equipment redundancy rate are forcing businesses to rethink their asset finance and asset ownership options. Rentals are fast becoming the preferred option for depreciating electronics that require regular replacement. It offers massive savings compared to ownership, regardless of whether one pays for these assets upfront or through traditional financing.
Merchant West head of technology asset finance Monique Watson points to the rapid rate at which technology changes and depreciates in real terms. "Partnering with Xperien allows us to offer a holistic Asset Lifecycle Product to its clients, from inception right through to the end of the asset’s useful life where clients can further benefit from the end of lifecycle value-added services, such as data destruction, reverse IT logistics and disposal."
The benefits of financing assets is not only the flexibility of repayment options either on a monthly or quarterly structure, but rentals are 100% tax deductible, minimising income tax obligations as well as savings on costly administration fees.
An operating lease is purely off-balance sheet funding where there is no depreciation to write off, and the interest is calculated on the capital amount, excluding VAT. By the end of the lease period you do not own the asset, and you will only have paid for the use thereof.
Rent to own or an operating lease with ownership is structured in the same way as a standard operating lease, with the exception that there is an option to take ownership of the asset at the end of the lease period.
A sale and leaseback arrangement is another option where the seller of an asset leases that same asset back from the buyer. This involves selling the fixed asset back to Merchant West, it is then rented back over the remaining lifespan. In this way the company still makes use of the asset while freeing up cash for other company operations.
Xperien chief executive Wale Arewa says liquidity is by far the biggest benefit of renting new or used equipment. "Business owners can now purchase any equipment and spread the payment across the asset's life. Rental is also the most effective funding option available on assets that require regular replacement."
"We now offer clients flexibility and peace of mind at the end of an asset lifecycle term through our continuous IT lifecycle solutions. Through this partnership, we can manage client’s assets and contracts for the duration of the rental agreement and they now have an option to return their assets and finance the new equipment via Merchant West," he concludes.