RentWorks, the residual based asset rental company from Australia, recently celebrated its first anniversary of operation in South Africa.
Since opening an office in Johannesburg in early 1998 with three employees, RentWorks now employs 15 staff members, has a branch in Cape Town and has financed assets with a total value in excess of R100 million.
Established in 1988, RentWorks is the largest independent asset rental company in Australasia, and has rented more than R4 billion worth of assets in that region during its ten years of operation.
RentWorks is unique in the South African market, in that it accepts the risk of recouping the residual value of the equipment at the end of the rental term. In doing this, RentWorks is able to offer clients lower rental payments throughout the contract period.
Equipment residual value is not a new concept in SA, but a finance company prepared to take risk on the residual, as RentWorks do, is undoubtedly unique.
"It`s not a new concept at all," says Glenn Goodall, MD of RentWorks SA, "it`s just never been offered in South Africa before, in other parts of the world it is a highly competitive business. "The idea that IT or Hi-Tech equipment may have a residual value at the end of a rental term has never been an issue here, as rental companies have covered their costs, and made their profits, on the payments made during the first term."
Part of RentWorks success can also be attributed to its ability to find secondary markets for the used equipment. The company believes that hi-tech equipment has more than one tier of application, with equipment that may be outdated for one user being ideal for another.
"Our secret," says Goodall "if we have one, is that we have the infrastructure to re-manufacture used equipment and the markets to re-rent it. We make our money on the second tier user not during the first term"
What makes the RentWorks solution even more attractive to industry is that it does not put any constraints on the make or supplier of the chosen equipment and works out rental payments base on the value of the equipment minus the pre-determined residual.
Since rental is an `off balance sheet` transaction it is tax deductible as an operating expense. It also frees up working capital that can be used to greater effect in developing core business interests. Further more, companies are given the peace-of-mind that at the end of the rental term the equipment is returned to RentWorks, thus eliminating the depreciation or disposal dilemmas associated with technologically obsolete capital assets.
To set up a meeting with a member of the RentWorks team call their Johannesburg office now on 883 6973, and let them work out a unique rental solution for your company.
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