Computer Finance by GrenkeLeasing from FWCS

Businesses are faced with three choices when buying IT equipment. Do they pay using their own cash, with a loan or should they lease?

By paying cash upfront, an either/or choice for essential IT equipment is created. What else could the cash be used for? Loans are hard to get - they require meetings with the bank, are usually for large expenditures and the administration can be complex. Leasing benefits you by giving you the products and equipment you need at an affordable fixed monthly cost allowing your business to quickly obtain equipment you need with minimum administration and/or impact on cash budgets. FWCS, together with GrenkeLeasing Computer Finance and Leasing can assist.

An Overview

What is leasing?

Leasing is a financial contract between your company and a leasing company. You will be committed to repay a given number of fixed payments for the term of the contract, (for example 36 monthly payments of £50+vat). We supply the goods to you and we are paid by the leasing company i.e. you are effectively renting the goods from the leasing company for the duration of the lease. The goods are owned by the leasing company at all times. Because you are renting and not buying the goods you can claim 100% tax allowance on the payment.

Who can apply?

Lease finance is available to all companies within the European Union, which includes sole traders, partnerships, limited companies, PLC's, national, and local government departments, schools, universities, hospitals & charities. The minimum price that would qualify for a lease is in the region of £500 + VAT and there is virtually no upper limit. Due to the tax laws that apply to leasing, we unable to offer this service to customers in Isle of Man, Republic of Ireland or the Channel Isles.

PLEASE NOTE: Small Businesses that have been trading for less than 18 months may have problems obtaining a lease due to their lack of trading and credit history available to the leasing company to make an application decision.

Easy to arrange
It is very easy to arrange a lease - just call us with your requirements to get an instant quotation on your equipment you need. Please note that the figures quoted may change depending upon the credit rating and status of the applicant. We handle all the paperwork and all you have to do is sign the appropriate forms which are sent to you.

No Large Upfront Costs - Most businesses earn revenue over time, but having to pay for equipment up-front, in one go, can tie up one of your most valuable resources; instead keep your money working for you and spread the cost of your IT equipment over its useful working life.

Budget Management - Leasing ensures a fixed manageable monthly payment, irrespective of interest rate rises or other external factors. The low monthly cost of the lease is fixed, enabling accurate budgeting and removing any guesswork from your financial forecasting.

Preserving Credit Lines - We offer leasing from £500 upwards. You can preserve your existing bank lines and optimise your use of commercial credit sources. No additional security required, leasing is entirely separate from any bank lending or other credit arrangements you may have. By leasing equipment, your overdraft or bank loans are free for use in running your business.

Tax benefits, 100% allowable against pre-tax profits - Leasing is fully allowable against tax. All payments are 100% tax efficient. Traditional Hire Purchase is not as tax efficient and therefore may cost more in the long run even if it initially looks cheaper.

Technology Upgrades - Leasing allows you to take advantage of technology advances at a time of your choosing and at a reasonable cost. By contrast, a business that owns IT equipment can only upgrade by reinvesting and disposing of the existing asset.

Flexible Payment Levels - You choose the payment level. Options range from 1 to 5 years. You select the right option so you have the technology you need at a price you are comfortable with.


Please Note: In this guide we use the term "equipment" to denote the assets being financed which may include hardware, software and any ancillary products.

Part 1 - About the agreement

Q What exactly is a Grenke Leasing Lease?
A It is a contract between you and Grenke for the hire of equipment that you have chosen through ’Reseller Name’. ’Reseller Name’ provides you with the equipment, Grenke pay the invoice and you pay them regular rental payments for its use over an agreed period.

Q Who are Grenke Leasing?
A GRENKE LEASING is Europe's leading independent supplier of leasing solutions for customers of business technology resellers; Grenke Leasing does not deal direct with end customers. Established in Germany in 1978, the group now operates in 13 countries. Grenke is a quoted company and not connected to any other institution or corporation. In the UK, Grenke Leasing provide national coverage supported by a team of field sales people based in all regions.

Q How long should the hire period be?
A The hire period should be no longer than the expected useful life of the equipment you are hiring. The maximum period we will offer on an agreement is normally determined by the type of products to be hired. As a guide, the maximum period for computers and software is 3 years and telecom products 5 years, although we will consider up to 7 years for some telephone systems.

Q What happens at the end of the hire period?
A These agreements are designed to provide flexibility over the life of the contract where benefits are mainly in the use of the equipment. Grenke will retain ownership of the equipment, but you will have the option to extend the period for up to 6 months if required.

Q How frequently do you require payments?
A Most people make quarterly payments, but generally you can pay monthly, quarterly, half-yearly or annually. Grenke's standard requirement is for payments to be made in advance by direct debit.

Q Can I change the payment frequency after the Agreement has been signed?
A Under some circumstances, it is possible to alter payment frequency, though there would be a fee associated with this request. The new regular rental required would be quoted to you before any change is made.

Q When are my payments due?
A Rentals under the minimum period commence on the first of the calendar month or quarter following the delivery of the equipment. Daily rentals are payable for the intervening period between the delivery date and the commencement of the minimum period.

Q Are the payments fixed for the period of the agreement?
A The basic rentals are not affected by fluctuations in interest rates. VAT will be charged at the rate applicable at the time rentals are due. If there are any changes in taxation or writing down allowances during the period of the agreement, Grenke may vary the remaining rentals to leave them in the same financial position they had assumed at the beginning.

Q Can I change my mind after signing the agreement?
A The duty to consider the contract in full before signing an offer for finance is on you. Once delivery takes place, the early termination rules, as stated in the agreement terms and conditions, apply. There is no cooling off period. You must notify Grenke immediately if you decide not to proceed with the hire agreement before delivery, but that does not affect your obligations to ’Reseller Name’ under the order you will have placed with them.

Q Can I end the agreement before the end of the minimum period?
A Assuming your payments are up to date, you will need to give Grenke three months notice, return the equipment and make a single termination payment as laid down in your Agreement. This will consist of rentals still left to go, minus an early settlement discount. A written quotation can be provided on request. Grenke's calculations are in accordance with industry guidelines.

Q What proportion of my rentals can I claim against tax?
A Under hire agreements you can claim the full amount of rental payments against taxable profits in calculating your tax liability for each year.

Q Are these agreements covered by the Consumer Credit Act?
A If you are a sole trader or partnership the agreement will be a Regulated Hire Agreement and subject to the provisions of the Act. This does not apply if you are a limited company or other corporate body.

Q What are next steps to apply for a lease?
A Fill in the application form and submit it to ’Reseller Name’ - in most cases we will have a decision within 20 Minutes. Once the lease has been agreed the contract will be sent out, signed and returned, then ’Reseller Name’ will dispatch the equipment.

Part 2 - About the equipment

Q Who is responsible for insuring the equipment?
A As soon as you take delivery of the equipment you are obliged to insure it against loss or damage. You are also liable for third party risks, including loss, damage or injury to persons or property. Grenke may ask you for proof of equipment insurance and if you do not have any, arrange it on your behalf. The premium would then be charged along with your rentals.

Q What happens if the equipment is stolen or damaged?
A If the equipment is stolen or damaged you should deal with this through your insurers in the usual way (unless Grenke have arranged equipment insurance on your behalf then we would process your claim). You must tell Grenke as soon as possible if loss or damage occurs. If you make an insurance claim that results in the equipment being replaced, then this new equipment will belong to Grenke.

Q What do I need to do about guarantees?
A If you want any warranties or guarantees for the equipment, its maintenance or suitability for its purpose, you must obtain them from ’Reseller Name’.

Q What about maintenance of the equipment?
A You are required under the terms of the agreement to make sure that the equipment is taken proper care of and used in accordance with the manufacturer's instructions.

Q Who should I contact if I have a problem with the equipment?
A Grenke can only deal with queries related to your lease agreement. Queries regarding the operation/maintenance of the equipment should be directed to ’Reseller Name’. Grenke will give reasonable assistance in helping to resolve any dispute but it must be clearly understood that we are not responsible for the choice of equipment.

Q How do I obtain equipment supplies?
A Your agreement with Grenke does not include the provision of consumables or other supplies and these must be obtained from ’Reseller Name’.

Part 3 - About changes in circumstances

Q What happens if I move premises?
A Thehe equipment is owned by the Finance Company and so you will need Grenke's agreement to move it. Therefore, you should notify them with the details as soon as possible before the move and they will process the request for transfer to a new site. The equipment may not be moved outside of the UK.

Q What happens if I sell my business or want to transfer the equipment to someone else?
A Grenke can affect a transfer by entering into a new agreement for the remaining minimum period, provided the proposed new hirer passes their credit checks. Grenke will charge an administration fee to cover our costs.

Q Can I change or add equipment before the end of the minimum period?
A Grenke can usually accommodate changes to the original equipment, subject to credit approval at the time. Contact ’Reseller Name’ to discuss your requirements and obtain a quotation for the amended rentals which would apply.

Q What if I cannot meet the payments?
A Obviously you will be under an obligation to make payments to Grenke when they are due. If you do not, they will make a late payment charge for each month that you do not make a payment on time. If you are having problems please contact Grenke as soon as possible and they will see what they can do to help. If you remain in default of your obligations, Grenke will have to take the equipment back (subject to statutory provisions) and you will be liable to pay them compensation.

Cash Vs Lease

Whether you are a sole trader, a PLC or a government dept., cash flow is the lifeblood of business. When it comes to spending large chunks of it on IT equipment, sooner or later the same question will come up; is it better to buy the equipment outright or to lease it? Below we will try to show you that from a cash flow point of view leasing has considerable advantages to your cash flow.


An up and coming sales company has decided that it needs to update its aging servers. They have decided that the network upgrade will cost a total of £11,750 inc VAT, they have also decided that they expect to expand further within in the next 3 years to ensure that they don't fall behind the technology stakes again, the following two scenarios show the financial benefits of leasing vs. buying.

Scenario 1 - Buying outright

Our company buys the new servers for a total of £10,000 + VAT, Immediately they are £11,175 down but as they are VAT registered they can claim the VAT back at the end of the current quarter in 3 months time.

And that's it, your money is tied up in the new equipment, so if you had other plans for the £10k then you're going have to get it from elsewhere. Over the next three years our company can claim back 25% of the balance per year.

Initial Purchase Price £10,000
Year 1
25% of £10,000 = £2500 - Balance = £7,500
Year 2
25% of £7,500 = £1875 - Balance = £5,625
Year 3
25% of £5,625 = £1,406 - Balance = £4,219

So at the end of the servers expected working life our company has been able to claim £5,781 against pre tax profits.

Scenario 2 - Lease Rental

Our company leases the servers over a 3 year period paying 1 initial payment of £343 + VAT, then 35 monthly payments of £343 + VAT.

So out of their original £10,000 + VAT budget they still have £9657 to spend on stock which they can sell for a profit, something that could not have been done if they had bought the equipment outright. This really is a case of having your cake and eating it.

But there's more. Not only does our company retain the money to spend on more stock, but the payments they make on the lease are 100% tax allowable against pre-tax profits. As shown below:

Year 1
100% of £4,116 (12 x £343)
Year 2
100% of £4,116 (12 x £343)
Year 3
100% of £4,116 (12 x £343)

Total that can be claimed back against pre tax profits is £12,348.

Even though the lease rental has a higher cost of £2,348 + the £10,000 over the 3 years, the ability to claim all of this back compared to the £5,781 for the outright purchase shows the tax benefits of leasing.


Why 'make do' with equipment that 'won't do'? Our leasing solution can give you the tools you need and not what your bank account dictates to you. So leave your overdraft intact and take the pressure off. After all, today's cutting edge equipment will be tomorrow's 'old hat'. It's the flexible that prosper, not the companies that hang on to old, outdated equipment. As any financial advisor will tell you, investing large sums in fast depreciating assets is not a wise move.

And finally, important things to remember about leasing in general:
    • The equipment does not belong to you, therefore you may not sell it.
    • A document fee is charged by the finance company and is payable with the first rental payment.
    • You must keep the equipment insured under your insurance policy; if it is broken or stolen you will be liable for its replacement or repair.
    • Interest charges may be levied for late payment.
    • The rentals will only change if there is a change in taxation rates i.e. VAT goes up or down.
    • The finance company is under no circumstances responsible for the quality or maintenance of the equipment or any warranty issues that may arise.
    • Always read the terms and conditions carefully before entering into any lease agreement.

Telephone (44) 870 443 4001
E-mail sales@fwcs.co.uk
Fax (44) 1923 397 343
Telephone (44) 870 443 4001
E-mail support@fwcs.co.uk
Fax (44) 1923 397 343
Highfield House,
25 Highfield Road,
Bushey, Herts WD23 2HD, UK
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