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UniLink Finance

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Upgrades Printers Scanners Digital cameras. Computer furniture Storage/Recharging trolleys ... The facility will enable the school to negotiate the best ... – PowerPoint PPT presentation

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Title: UniLink Finance


1
Leasing Opportunities for ICT Procurements NGfL
Briefing for Schools 22 January 2002
Ron Fawcett Procurement Services Manager Dorset
County Council
UniLink Finance
2
Frequently asked question
Is it best to Lease or Buy ?

If sufficient funds are available for outright


purchase of all current
requirements without compromising your preferred
specification then outright purchase will provide
best value
Where funds available are limited then leasing is
a way of spreading the cost of a project over
several financial years
UniLink Finance
3
Background Why Dorset has appointed a Lease Agent?

DCC has been debt free authority

Latterly moving to more leases

Need to manage-

Impact upon borrowing approvals

Leasing process

Scarce skills

Lease agent (as business partner)
UniLink Finance
4
Background Role and responsibility of the Lease
Agent

Key requirements-

Total independence

Act as Purchase Agent

Conduit for final purchase (if required)

PFM carried out tender process

UniLink Finance Ltd - to March 04

Mandated DCC agent 3m in 01/02 (so far)
UniLink Finance
5
Advantages of the Countys Leasing Facilities

Safe - conforms to all regulations and is
managed from start to finish

Certainty - all costs known at the outset and
options
for the end of lease are assured


UniLink will act as conduit for school to acquire
title

Upgrades possible

Leasing market regularly tested by UniLink

Possible to include software
UniLink Finance
6
Disadvantages of dealing directly
with Lessors/Suppliers

True cost not disclosed

Documentation not cleared with Council

Harsh return conditions and possible tax penalties

Cost of upgrading hidden - and expensive

Locked into using one supplier

On return, sensitive data must be wiped
UniLink Finance
7
What can be included in an ICT equipment lease?
The following is not a definitive list, merely a
guide
Desktop computers Laptop/Notebook
computers Servers Network hardware Cabling Upgra
des Printers Scanners Digital cameras Computer
furniture Storage/Recharging trolleys Wireless
Network Access points PCMCIA network
cards Building and associated work (provided
essential for leased equipment) Software
(subject to it being required for the computers
included in the
lease arrangement and acceptance of the Lessor)
UniLink Finance
8
The PFM Leasing Process (1)

School decides resource requirements

PFM advises school of likely lease cost

School completes lease proposal form (not
committed)

PFM goes to tender (if necessary for resources
only)

School decides - lease or not

PFM awards contract / PFM or school orders

Supplier bills school / school pays

School sends copy invoice to PFM
UniLink Finance
9
The PFM Leasing Process (2)

PFM aggregates schools purchases

PFM sends suppliers invoices to UniLink

UniLink arranges lease

Lease company pays DCC

DCC credits schools budgets (within 3 months)

Lease company bills DCC / DCC pays (Annually or
Quarterly)

PFM arrange recharge to school (Ann/Qtly.)
UniLink Finance
10
The PFM Lease Process (3)

UniLink-

Review performance of lease throughout

Represent school with leasing companies

Manage any additional leases

Manage end of lease process

Act as conduit for final purchase

PFM manages relationship with UniLink

Included in PFM procurement service
UniLink Finance
11
Advantages Of Dorset County Councils Leasing
Facility
  • The facility is safe and produces the lowest
    whole life costs available in the market. The
    total payments for the equipment are certain when
    the lease is incepted and hence the true cost of
    borrowing is known. Thereby total transparency is
    achieved both on a cost basis and in the terms
    and conditions that apply to the use of the
    equipment.
  • The school or any individual will be able to buy
    any assets at the end of the lease term. We at
    UniLink will buy the asset from the selected
    lessor for a nominal price and sell to the school
    or individual at the same nominal price. Thus
    there are no return condition penalties.
  • The leasing facility conforms with the current
    legislation regarding operating leases
  • The equipment can be upgraded throughout the
    lease with a new lease incepted on the upgrade
    only i.e. again with certainty of cost.
    Furthermore such upgrade options will enable the
    school to consider alternative suppliers options
    thereby achieving the best price available.
  • The county through UniLink will regularly test
    the whole market to ensure the terms available
    are the most competitive
  • In most circumstances software installations can
    be included in the lease facility
  • The facility will enable the school to negotiate
    the best purchase price with the supplier of its
    choice without fear of being locked in to the
    suppliers financing package.
  • The facility will be easy to administer, with a
    single point of contact i.e. Procurement and
    Facilities Management (PFM)
  • The school will be secure in the knowledge that
    the legal and commercial aspects of the facility
    have been fully analysed and approved by the
    Councils financial and legal teams, Procurement
    and Facilities Management (PFM) and UniLink, the
    Councils independent advisor. The school can
    also be certain that the selected lessor will be
    a reputable financial institution

UniLink Finance
12
Drawbacks Of Dealing Directly With
Suppliers/funders
  • Headline rentals may appear attractive, but
    renewal terms are rarely disclosed, hence the
    true cost is unknown. Also the cost of acquiring
    the equipment is likely to be prohibitive.
  • The legal documentation may not be reviewed by
    the Councils financial and legal teams with each
    school having to consider agreements on a deal by
    deal basis. Many agreements are generally biased
    in the suppliers/funders favour and are best
    reviewed by experienced hands.
  • Many simple agreements will not highlight the
    schools exposure to costs associated with-
  • Tax written down value penalties
  • Extension rental terms or buy out options
  • The testing and replacement of missing or damaged
    parts
  • Collection or re-delivery
  • Refurbishment (refer to WEEE regulations below)
  • Any upgrade of equipment is expensive. In many
    cases the general terms of any upgrade from the
    funder/lessor allow for a certain percentage of
    the original cost to be upgraded at various
    intervals throughout the term of the lease.
    However, at the date of the upgrade although the
    school may only be required to pay the original
    rentals the new term of the lease reverts to the
    original selected term. The transaction then
    becomes very expensive and in many cases the
    financing costs can double.
  • Concluding transactions with certain suppliers
    automatically locks the school into that company
    for upgrades thus creating opportunities for the
    company to increase its prices.
  • Where equipment is returned, schools will be
    required to erase sensitive data and maybe
    charged additional costs by the suppliers/funders
    to comply with European Commission waste
    electrical and electronic equipment directive
    (The WEEE regulations). These regulations seek to
    increase recycling and recovery of waste
    equipment (including IT). The regulations were
    adopted by the European Commission in June 2000
    and the directive is expected to become European
    law in June 2002 with implementation in member
    states 18 months later. This potential cost to
    schools will be provided for in most lease
    agreements but is not usually referred to
    directly. Documentation will often simply state
    that the equipment shall upon return be
    refurbished by the lessee in accordance with all
    applicable laws and regulations. In reality such
    refurbishment costs (as itemised above) could
    well be significant.

UniLink Finance
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