Rental options offer huge benefits to Supported Software clients

To overcome the challenge of funding large IT projects, infrastructure optimisation company, Supported Software, part of Datacentrix Holdings, is now offering its customers rental solution financing options from SRI, a subsidiary of Paradigm Capital Holdings Limited.

Large organisations have an ongoing need to implement new information technology (IT) solutions, in order to meet their ongoing and changing business needs. Furthermore, the IT requirements of companies need to be upgraded more frequently, as hardware and software become obsolete more quickly, as a result of the rapid advancement of IT.

The acquisition of such solutions is usually funded by traditional methods, such as cash, loans, overdraft facilities, installment sale options or financial leases.

"These options present IT decision-makers with the problem of raising the capital, budgeting the sum into a given financial year, obtaining approval for capital expenditure and capitalising IT solutions on the balance sheet," explains Software Rental International (SRI) general manager Warrick Lawrence.

Added to this is the fact that the costs of most software maintenance, support and annually renewed licenses are based on foreign currency. As the Rand depreciates, these costs increase and the purchase of software, software licenses and related services is a risk-heavy decision, representing unpredictable and variable costs.

The rental solution means that the customer does not have to raise the full amount upfront and it does not impact on the existing financing facilities of the client`s company.

"The concept of `cost-in-use` gives the client the opportunity to pay only for the use of an asset without the costs associated with ownership. This allows the use of the asset to be treated as an operating expense, which is written off as it is incurred, and is an off balance sheet expense, removing the need to capitalise the value of the asset on the balance sheet," he details.

As an operating expense, the rental payments are also 100% tax-deductible and this benefit can offset the cost of the monthly rentals.

"In sum, the concept of `cost-in-use` for non-core productive assets streamlines company cash flow and allows for the more effective use of working capital," remarks Lawrence.

Another benefit of the SRI rental option is that the risk of foreign exchange related fluctuations in software maintenance and licensing costs is transferred from the company using the products to SRI.

"The rental option also gives the client the ability to upgrade the entire IT solution, or part thereof, at any time without having to worry about disposal costs or obsolescence of equipment," he continues.

Supported Software clients using the rental option can also enjoy the benefit of upgrade credits, which allow customers to upgrade a percentage of the rented IT solution without changing the current rental value.

Furthermore, IT related expenses, such as implementation and project charges, insurance and maintenance, can be included in the rental solution, enabling customers to accurately budget for their IT expenditure.

Rental contracts can be tailored to suit each client. For instance, rentals can be stepped, monthly or quarterly. Contracts may vary from 24 to 60 months, and can be extended or reduced should the client`s requirements change.