Don't sweat the small stuff.

Paul Getty, one of the world's richest men said: "If it appreciates, buy it, if it depreciates, lease it."

"However, in this instance," says Jenny Gill, managing director of Centrafin, "rent it."

Applying these sentiments to modern technology, which depreciates at a phenomenal rate, as well as the constant advances in technology, there is an ever-increasing role for the financial product of operating rental. When equipment is rented it is not shown as an asset on the balance sheet, but more appropriately, the payment is categorised as an expense to the business. The asset lies in what the technology can do for the business and not the equipment itself.

This means finance houses and financial intermediaries have a meaningful role to play in assisting companies putting into practise the profound principles of Paul Getty.

However, companies still continue to sweat the small stuff. Too much emphasis is placed on the fine print or "small stuff", which is pretty standard on all rental agreements. Clients also seem to pay too much attention on interest rates, which, in effect, do not apply to rental agreements. Reputable finance houses and intermediaries make a small margin and rely on turnover to make the business profitable.

In "sweating the small stuff", the focus is taken off more important issues that companies should be aware of when signing a rental agreement or, for that matter, any agreement.

When signing an agreement, consider the following:

* Is the supplier/dealer a registered dealer for the equipment being supplied? Don't entrust your equipment and finance requirements to a "Jack of all trades."
* Obtain various "cash" quotations for the goods to ensure pricing is in line with market norms.
* Ensure the supplier/dealer is able to service the goods. The finance house cannot be held responsible for the maintenance of the goods and clients cannot resile from payment as a result of non-performance of the goods.
* Ensure contracts are completed before signing. All too often companies advise that the contract was signed blank and therefore they did not know what they were signing for.
* Check the contract for escalations. Escalations have a role to play in an inflationary environment and also ensure technology specification can be maximised. However, escalations must be disclosed so the client can make an informed decision.
* Don't sign more than one agreement for the same goods. If an agreement needs to be resigned, ensure you get the old one returned to you.
* Never sign-off the installation certificate, release note or "happy slip" provided by the finance house if the installation is not completed to your satisfaction. Once again, the defence has been used that the dealer said they could not install the equipment if the release note was not signed. The release note is designed to protect both parties and once signed, is an authority for payment to be made to the supplier/dealer.

Operating rental is the perfect product for financing technology-based equipment. Payments are fully tax deductible and the agreement provides for the upgrading of equipment throughout the duration of the agreement. Used correctly, it is a powerful tool in business, but take as much time to read the front of the agreement as well as the back of the agreement.