The introduction of IFRS 16 has re-written the rules for leasing within schools.
Significantly it means that schools can now enter into leases which do not have a balloon payment at the end. This is excellent news for schools as a lease agreement with no residual built in provides schools with total visibility over future payments.
Agreed, in the absence of a residual payment, this means that the payments may be marginally higher, however overall, the total cost of investment will be lower which gives greater value to the school.
The fixed price rentals greatly help forward planning as it means the school can budget accurately what future outgoings are going to be and if there’s one thing that School Business Managers like – it’s financial certainty.
IFRS 16 enables total transparency on leasing figures for Schools
Used correctly and with total visibility which is what the fixed price Agreements guarantee, leasing is a valuable tool which provide schools with the ability to forward plan and overcome the effects of inflation and future price increases.