The advantages of leasing pallet racking

The advantages of leasing pallet racking

In addition to your warehouse or storage facility, other business essentials like computers, printers, machinery, forklifts … and pallet racking can be leased. When it comes to managing monthly cash flow, renting pallet racking and storage materials offers you flexibility, savings and more room to grow.

 

Renting racking by the way of an Operating Lease (OPL) allows your business to access the racking you need upfront without the initial cash outlay. It’s a simple way to conserve capital and manage cash flow with fixed, monthly lease payments.

As there is no transfer of ownership involved, an OPL allows you to operate equipment with no related capital expense. Payments are accounted for as an operating expense, and therefore are not reported on the balance sheet. What’s more, is that each payment may be up to 100% tax-deductible.

Undertaking an Operating Lease (OPL) is one of the smartest ways to acquire capital equipment. For businesses that require scalability or that need to set up a temporary storage facility, an OPL agreement allows you to add to or upgrade equipment throughout the agreement. This reduces the risk of equipment becoming obsolete before you have made full use of your investment.

At the end of the agreement term, you have the choice to:

1. Upgrade the equipment.
2. Continue renting the equipment.
3. Return the equipment.
4. Purchase the equipment.

Here’s a quick overview of the benefits of renting pallet racking:

  • Affordable, fixed monthly payments for the term of the agreement
  • Getting the equipment working for you now, while spreading the cost over time – saving cash.
  • Flexibility for you to choose at the end of the term whether to update the equipment, continue to rent or simply hand it back with no further obligation.
  • Payments that can be expensed, just like other business costs.
    When you consider other business expenses – staff, leasing a premises, utilities, etc. – these costs are spread out over weekly or monthly payments. So it makes sense to do the same for the rest of your business equipment, including the pallet racking.
Breaking down the cost per pallet space

Depending on the terms of your lease, racking type and scale, the cost of renting pallet racking can be as little as 25-30c per pallet space/per week.

Understanding business expense as a weekly cost, rather than large up front payment, allows businesses to better understand the return on investment. You can more accurately compare the cost of the storage materials against your weekly or monthly profits.

Renting Vs Buying

In the below table, we compare the cost of renting pallet racking versus purchasing the equipment outright*. It gives a good idea of just how much cash you can free up to grow your business over a 3-5 year period.

Cost of Goods (ex GST)    Term    Monthly Payment (ex GST)

$182,876                                    36          $5,750.90
$182,876                                    48          $4,439.56
$182,876                                    60          $3,654.63

*The above table is an example only for illustration purposes, costs vary based on individual requirements – for a tailored quote, please contact Safer Storage Systems.

Learn more about rack rental here.

The above article consists of information that is general in nature. Safer Storage Systems does not provide financial advice. Please seek independent, professional tax and financial advice before making any decision about renting or leasing equipment for your business.

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