Rentals – How tied in are you?
We at Olivetti Imports, often work very hard at presenting a deal, explaining the pro’s and cons of various options, do test prints, convince junior staff and then senior staff of potential clients to show them how much they can save by procuring our latest Olivetti technology or product .… all the while knowing that they have an existing rental agreement with another brand.
Does this stop us? NO. Should it stop you? NO.
Either it will slow us down – in other words if a device can only be upgraded in 3 years’ time, we can make a few calculations and work out when is a good time to do the upgrade to the new Olivetti – in other words; at what point in time does it become feasible to save money by doing the upgrade and also get better service from a company like Olivetti Imports? Then wait until that time to re-invest our time in the process.
We will work out that there is a short enough time and value left on the existing agreement to buy out the contract. This sometimes can be a little complicated as companies often give skewed settlements. Our recommendation – when asking for your settlement on your existing product – ask for a BREAKDOWN – how did they get to that figure? Usually we offer guidance here and have managed to save our clients a good percentage off the settlement by helping the client stay informed.
Example if the rental is R1000 per month and eight months remain then the settlement is R8000 – right? Sometimes a nominal fee for service may be included or be separate. The only part of that fee that can possibly be accepted is the basic service fee. Some companies build in way too many copies into that basic service fee to make it “basic”. I would say the only fair way of doing this is the rental multiplied by how much time is left and possibly a small amount for service, like R100-R200 per month is possibly acceptable as that’s almost like a “contract fee”. Telling the client that they usually do 5000 copies so therefore must carry on paying for that until the end of the contract, is just not acceptable. We recommend arguing this as it means you are paying for toners and parts too, that you will never use and not just a basic contract fee.
If you are ever stuck with trying to work out what a fair settlement should be, please feel free to contact us!
In an ever changing economic climate, rental application approvals become more and more difficult but there are usually options that can help with this. Eg, supplying all the paperwork in at the beginning, like ID’s of directors, company registration documents and so on are very helpful. Sometimes depending on the size of the company, directors may or may not be asked to sign surety.
Sometimes, even with all this hard work, it’s not always guaranteed that a rental will be approved. Although it’s just a rental to some, the actual process it represents explains this.
- In the case of a settlement – the rental house is financing money – no asset that can be retained in cases of risk.
- The actual device you rent comes at a cost to the company selling it – they sell it to the rental house, the rental house then takes a number of years to recoup the cost of laying out the money to pay for the device. Once the equipment is out the box and on your floor, it’s like driving a new car off a showroom floor. It loses retail value and if the client reneges on the contract, there is a loss to the finance house, even if the equipment is collected, it’s lost a percentage of it’s original value.
Hopefully this explanation of settlements when renting equipment has been helpful.
Please don’t hesitate to contact us for further advice on how we at Olivetti Imports can help you save and upgrade comfortably.
Written By: Justine Wittels – Olivetti Imports