Accurate/Western Scale Co. Ltd. offers an option to either purchase or rent a scale system - either large enough to weigh trucks, or small enough to fit the countertop of your retail shop. This is a business decision that can affect your return on investment (ROI) so you need to compare the economics of renting versus buying as well as the factors that determine which makes more sense for YOUR business.
One of the key reasons for renting is that your initial outlay of cash to gain the use of an asset is generally less for renting than it is for purchasing. The main advantage of purchasing is that you may end up paying out less in the long term than you would have paid if you rented. One way to reconcile this is to do a mathematical analysis of your net cash flows that would result from renting and from purchasing. A cash flow analysis provides an estimate of how much cash you would need to set aside today to cover the after-tax costs of each acquisition alternative. To perform the analysis, you need to know or assume certain facts, including:
purchase price and financing terms
rental agreement terms and conditions
your combined federal and provincial tax rate
the scale’s expected useful life to your business, for depreciation purposes
the scale’s estimated value, when you sell it, or at the end of its useful life to your business
your cost of capital
any other costs that you would incur if you rented the scale but not if you purchased it, or vice versa (for example, maintenance costs).
Other decision-making factors supporting purchasing include long-term cost, yearly taxation depreciation deductions, and control - if you rent you’ll need permission for modifications. Factors supporting renting or leasing include cash flow, maintenance, and business mobility - you may need more or less space, your target market may have moved elsewhere, or better-suited locations may become available. Things to Remember When Renting Scales If you do decide to rent or lease, consider a renewal option that entitles you to renew the lease for a specified period and a specified rent. Most leases also include late payment provisions that impose additional charges if you fail to pay the rent when it’s due or within a specified grace period. If your business experiences seasonal or irregular sales activity, try negotiating a flexible rental rate that corresponds to the changes in your cash flow. You also need to negotiate any increases in rent over a specified time period, termination of the lease, and maintenance requirement as well as who is responsible for them. Call Accurate/Western Scale Co. Ltd. for Scales Rentals in Calgary As business owners, we face many decisions daily. If a requirement is for scales as part of your business plan then contact Accurate/Western Scale Co. Ltd. at 403-250-3232 today to learn more about our company, the quality of service we provide, or to get a quote.