Ed's Example Structured Rental Profiles

Example A
IT Project Cost £70,000 - Project Start: January 2002

The school is installing a new IT suite in January 2002 at a cost of £70,000. The supplier initially offered finance over 3 years. When the school said they wanted to restrict the amount spent from their annual budget to £20,000 and ideally with no payment in the current year the supplier offered a 4-year term but insisted on an initial payment on completion of the installation. The supplier finance offers means the school would have to allocate funds from it's budget as follows:

Education Rentals seemed to understand our position from the start. Not only did they recognize that we had no money left in the current year budget but suggested a deferred rental payment to start in the autumn term. This means that the school only starts to pay when the IT facility is fully up and running for the new pupils scheduled to start at the school in the autumn and also means that less than £10,000 comes out of next years budget. The annual payments are kept within our desired annual budget figure of £20,000 and coupled with Education Rentals technology refresh facility, we have a flexible funding arrangement and clearly an understanding partner.

The Education Rentals funding requires the school to allocate funds from the annual budget as follows:

The important factor to the school is achieving a saving out of the current year budget of £5,410 and £1,672 in each of the following three years budgets.

Example B
New Science Facility - Project Cost: £120,000 - Project start: January 2002

The school is installing a new Science Facility in January 2002 at a cost of £120,000.

The supplier has offered finance over 3 or 4 years.

The supplier finance offers means the school would have to allocate funds from it's budget as follows:

However, what the school wanted was a budget expenditure profile that reflected the planned increase in pupil roles as a result of establishing the new science facility. Education Rentals offered an escalating profile with no payment required in the current budget year and then escalating at 5% per year in line with our student intake forecast. This enables the school to match the expenditure on the establishment of the new science facility closely to the expected revenue from pupil intake.

The Education Rentals funding requires the school to allocate funds from the annual budget as follows:

The Education Rentals facility delivers a current year saving of £9,275 and £1,380 in the following year by which time revenues from additional pupils will be received to meet the costs.

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