TDP Holdings

Financing Technology

TDP have been financing technology for their customers since it's inception.  With refurbished systems, we can generally offer in-house financing options for temporary and longer terms to suit your needs.  TDP also provide financing through a reputable B2B financing institution with excellent rates and customer service.  Our long term alliance with the company has allowed our customers many great benefits as a result. 

We provide our customers with two major options to finance their technology, namely Renting or Outright purchase.  We find that these two types of financing provide our customers the most flexible arrangements for their new business technology purchase. We can, at the specific request of our customers provide leasing as well.  However there are very little benefits to the customer at the end of the term compared to renting or outright purchase.

 

With all our rentals, you can finance your total IT requirements for agreed terms from 36 months to 60 months.  Renting technology also makes sense when you consider the life cycle of technology.  Most people around the web state they get anything from one year to three for their business computers.  As computers, phone systems, software and servers all have short life cycles, after three years, your computer or server may not meet the requirements you need today.  Phone systems usually have around 5 years. And does your business buy outright all your mobile phones? More than likely, you buy on a mobile plan where the phone is subsidised off a mobile calling plan. 

 

Why own an asset that has little residual value after three years and little chance of selling at that residual value?
Renting all your technology starts to make more sense.

 

Benefits of Renting Technology

Tax Advantages

Rental is treated as a business operating expense and normally qualifies as a 100% tax deduction. We encourage you to consult your tax adviser in this regard to appreciate the full benefit of this type of finance.

No Residual Risk Liability

Residual risk is transferred to the finance company thus eliminating any potential loss to you from the sale of equipment.

Conserving Capital

Why commit your vital cash up front on equipment that may be rapidly obsolete, depreciate quickly and be difficult to sell? Alliance's Rental gives you the ability to obtain new technology easily, without committing large capital sums.

Flexibility

o Rental gives you the opportunity to upgrade to new technology anytime during the period of the agreement (some conditions apply) through a simple Variation of Rental. You can also add on additional equipment or dispose of equipment during the term, enabling you to meet the changing needs of your business.

End of Term Options

At the end of the Rental our clients are presented with alternatives (not obligations) and you may elect from any of the following: -

  • Upgrade to new equipment.
  • Renew the term and continue to rent the equipment for a further period.
  • Return the equipment - As there is no obligation to pay a residual value at the end of term; you have complete freedom to return the equipment with no risk of residual accounting loss.
  • Offer to purchase the equipment at fair market value.

All of these options are subject to the terms and conditions of the Master Agreement you have executed.

Comparison of Financing options

Rental

  • May qualify for off Balance Sheet reporting.
  • Simple accounting if the equipment is 100% for business use then the payment is 100% tax deductible
  • Preserves Working Capital. Paying a monthly rental on the asset as it is used to earn income
  • 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.
  • 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.
  • Maintenance, software, installation and other intangible items can usually be included.
  • Reduces risk of equipment obsolescence with ability to upgrade.
  • Flexible end of term options.
  • GST paid with your payments can be claimed on your Business Activity Statement

Lease

  • Needs to be shown on the Balance Sheet as both an asset and liability.
  • More complex accounting maybe required. Equity accounting as per AAS17 may be necessary.
  • Preserves Working Capital. Paying a monthly rental on the asset as it is used to earn income.
  • Residual value liability.
  • Contract has to be paid out in full if the client is wanting to upgrade to new equipment.
  • 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.
  • Normally for hardware items only. Any intangible items will probably require a cash payment by the client.
  • Risk of obsolescence.
  • Minimal end of term alternatives.
  • GST paid with your payments can be claimed on your Business Activity Statement.

Outright Purchase

  • Needs to be shown on the Balance sheet as an asset, showing the reduction in cash reserves or increase in liability in overdraft.
  • Yearly accounting requirements of calculating the depreciation on the asset and the relative balance sheet adjustments will be required.
  • Reduces Working Capital. Having to pay completely for the asset today.
  • No residual value liability.
  • 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.
  • Add ons and upgrades will be paid for in full by the client, which again reduces working capital.
  • Client pays cash. Reduction in working capital again.
  • Risk of obsolescence.