From Rental to Purchase

Agreeing the conversion terms up front

If buying is a real possibility, write the route into the rental agreement rather than leaving it for a later conversation. A purchase option clause should state how the price is worked out, the window in which you can exercise it, and how much of the rent paid is credited, with any cap on that credit. Say whether the credit applies to the unit you rented or to a new one, since the provider may prefer to sell new stock. Fix the warranty that would apply on conversion and the date it starts. Without these terms, your negotiating position weakens just as your team has come to depend on the robot.

Evidence that the case is proven

Base the decision on records kept during the rental. Pull together the tasks completed against the measures you set, the fault and downtime log, the number of times staff had to step in, and feedback from the people who worked with the robot. Note what it took to keep it running: provider visits, software changes and workarounds. Then ask what would change on ownership, since support that came bundled with the rental may become a separate contract with its own fee. If the evidence is mixed, a longer rental or a trial of a second model may settle the open questions more cheaply than a purchase would.

Buying the unit you trialled

Buying the robot already on your site has advantages: it has been mapped and set up for your work, and your team knows it. It also has a history. Ask for its total operating hours, a battery health report, the repair record and the firmware it runs, and compare the offered price with a new unit carrying a full warranty. Request a service and inspection before ownership passes, and confirm that software licences, cloud accounts and support entitlements transfer to you. If the robot worked for other hirers before you, ask how their data and maps were removed. Get the condition at transfer recorded in the same way as at the start of the rental.

How ownership changes the accounts

Ownership moves the robot onto your books as an asset, and the conversion terms can change how the rental itself is accounted for. Under IFRS 16 Leases, a lease that contains a purchase option does not qualify as a short-term lease, even if it runs for less than 12 months, so adding an option to a short rental may bring it onto the balance sheet. Talk to your finance team before agreeing the clause. On the tax side, GOV.UK explains that capital allowances let UK businesses deduct some or all of the value of equipment and machinery from profits before tax, which may apply once you own the robot. Your accountant can confirm the treatment.

Sources and further reading

• IFRS 16 Leases — IFRS Foundation.
  The international accounting standard for leases, which puts most leases over a year on the lessee's balance sheet.
• Claim capital allowances — GOV.UK.
  How UK businesses deduct the value of plant and machinery they own from profits before tax.

Common questions

Is an ex-rental robot cheaper than a new one?

It may be, but compare the whole offer: remaining battery life, the warranty, included support and software licences. A modest discount can disappear if the ex-rental unit needs a new battery pack soon or comes with a shorter warranty than a new robot.

What is rent-to-own for robots?

An arrangement in which part or all of the rent you pay counts towards buying the robot at the end of the term or within an agreed window. Terms vary widely, so check the credit rate, the purchase price formula and what happens if you decide not to buy.