This means that rentals do not appear as an item on the company's balance sheet.

HOW DOES THIS BENEFIT YOU?

The equipment is rented and appears on your Income Statement as an operating expense rather than a fixed asset. This, in turn, does not effect your cash flow or future borrowings from your financial institutions.

2. TAX ADVANTAGES TO USERS

The monthly rental payment appears as an operating expense on you income statement and is fully tax deductible.

VAT is not capitalized against the purchase price. Thus, interest is not paid on the VAT portion. Rental finance charges are worked out on the purchase price excluding VAT and thereafter VAT gets added on to monthly rental payments.

3. CONSERVATION TO WORKING CAPITAL

As no deposits or initial lump sum payment are required, rentals offer a low entry level of cost, reducing the use of working capital.

Rentals, due to its off-balance sheet nature, require much less bookkeeping than outright purchases and conventional forms of financing. Purchased or leased assets must be capitalized, depreciated and finance charges must be calculated on leases. All this requires time and effort and leads to more accounting expenses.

5. FLEXIBILITY

As the constraints of the Usury Act do not effect rental agreement, payment structures and terms are only limited by the economic life span of the equipment and the end users budgetary constraints.

6. END OF PERIOD OPTION

Rental agreements are structured in such a manner that ownership of the equipment can be carried over to the user at the end of the rental period. This is very useful where the life span of equipment is over a longer term than the term of a rental.