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Benefits of finance
Example: Supposing you were required to purchase something new for your company to the value of $10,000. Would you pay cash or would you finance it. The benefits of finance are outlined below.

Paying cash:  $10,000 that you cannot use anywhere else

Financing:  $73 per week for 36 months

SAVING ON $10,000 USING FINANCE = $ 1,936

FINANCE / RENTAL
vs
 
CASH
Future proofing to avoid equipment obsolescence
YES
 
NO
Exchange or upgrade option
YES
 
NO
Flexible payment options
YES
 
NO
Retain cash
YES
 
NO
No capital budget approvals required
NO
 
YES
Bundle software, service and maintenance
YES
 
NO
All payments fully tax deductible
YES
 
NO
       

USING CASH vs FINANCE

 
 

TAX ALLOWANCES ON FINANCE

Cash cost   $10,000 Repayments on $10,000 $318 x 36 months = $11,448
Less Depreciation Allowance =$ 3,000 Tax Savings $11,448 x 30% = $ 3,434

Total

=$ 7,000

 

 

DEPRECIATION CALCULATION
  • Year 1 Allowance on $10,000 x 33%
=$ 3,333
  • Year 2 Allowance on $10,000 x 33%
=$ 3,333
  • Year 3 Allowance on $10,000 x 33%
=$ 3,333
Tax Saving P/A $3,333 x 30% =$ 1,000
Over 3 years =$ 3,000
       

RETURN ON INVESTMENT (ROI) COMPARISON ON $10,000 ESTIMATED AT 9%

By using finance you retain your valuable cash flow and you are able to generate an income.

This is what is termed ROI.

For this example we are using 9% ROI which is calculated Net profit before tax/total turnover

 

 
Profit
Cumulative
  • Year 1 $10,000 x 9%
=$  900
=$10,900
  • Year 2 $10,900 x 9%
=$  981
=$11,881
  • Year 3 $11,881 x 9%
=$1,069
=$12,950

 

TOTAL ROI on $10,000 over 3 years

 

=$2,950  
Finance Cost Flashing light bulb   =$11,448
Less ROI   =$  2,950
Less Tax Allowance   =$  3,434
Total   =$  5,063
SAVING ON $10,000 USING FINANCE   =$  1,936

 

If you would like more information please call 1300 309 806 or CLICK HERE and a representative will call you as soon as possible.

 


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