As with much in life, no single solution fits
all, says Van Heerden.
And, as mentioned above, IFRS 16
may change the fit completely, as it will
force operating leases onto the balance
sheet, which may affect company
financial ratios. This, in turn, will gross
up the balance sheet, impacting loan
agreements, borrowing costs and/or
credit ratings.
Change may be a constant, but one
thing will never change and that, says
Burton, is the value of relationships.
“Support provided by equipment suppliers
is paramount, as is their reputation,
product range, versatility and flexibility,
supply of spares, and warranties,”
he elaborates. “All of these influence
availability, or ‘uptime’, of an asset required
to perform a job, and they can build or
break a customer’s reputation.
“There is absolutely no substitute for
committed partners, and that applies not
only to products, but to finance.”
Points to ponder
• Get your bucks in a row. Your financier
cannot advise what is best for the
company unless he or she has a
thorough, up-to-date picture of your
financial situation.
• Gear up on gearing ratios, VAT,
expense write-offs, depreciation
items, asset value, finance charges,
and tax when making purchase or
finance decisions.
• Cost is but one consideration. Evaluate
your company’s current situation, its
capabilities, and its future plans before
deciding on an acquisition option.
• Don’t refuse used. Well-maintained
second-hand equipment is cheaper
than new and often more cost
effective than rental.
• Firstly, and lastly, ask your accountant if
you want an expert opinion on rent
versus buy and the tax implications
of buying decisions. ■
PERSPECTIVE
ABOUT THE AUTHOR
Susan Unsworth has wielded a pen for
more than 35 years. Initially with The Star,
she has written for numerous consumer
and trade publications and survived a long
stint in public relations. In 20 years of
freelancing, she has tackled hundreds of
corporate and government assignments
and believes that words, regardless of
subject matter, should have personality,
and strives to make hers a breeze to read.
JUNE 2018
25