30 Things To Not Forget When Purchasing a CapEx
Published on Tuesday, 6 August 2013 10:21:31 Written by Marc
Ever purchase a piece of equipment thinking it would be a standard procedure without first consulting a defined checklist of things not to forget, only to find out how big of a mistake that was? Regardless of the complexity of the capital expenditure or purchase, I tend to believe that having good capital planning and a good checklist handy can prove essential for a smooth transaction. Even when the purchase seems like an obvious repeat of something you previously purchased. This idea of consulting a checklist of things not to forget applies to standard purchases of equipment but especially if the equipment is something completely new and/or coming from a foreign country. So, what should your checklist consist of? Although the title of this blog could probably have read “100 things not to forget when purchasing a capex,” I assembled a list of the 30 main elements that you should at least keep in mind when purchasing a new piece of equipment.
- What is the real price, which is the total price once everything is included?
- When is the expected delivery date (the day it will arrive at your site)?
- Where is the delivery point (learn the incoterms if possible, don’t get surprised if the delivery is at the manufacturer’s place if it is written “Exworks” in your contract)?
- When do you take ownership (when is ownership transferred to you)?
- When do you take responsibility (if something breaks, when is it under your own insurance)?
- Who ensures it and for what amount?
- What happens if there is a problem (return policies of the company, what if it comes partially broken)?
- What is the payment method (by check, bank transfer, letter of credit, other)?
- When do we pay what (timeline for actual payments)?
- Are there taxes to be paid, how much and to who?
- Performance clauses (quality, speed, number of items, efficiency, durability)?
- Installation requirements (electricity needed, plumbing to plan for, settings required, access in building to bring the equipment inside)?
- What are the dimensions of the package or the equipment, what is the weight and can your warehouse handle it?
- What are the packaging and labeling requirements and in what languages are the instructions available?
- Security concerns (are guards required or extra manpower)?
- Patents infringements and potential lawsuits if we are buying from a new supplier (does the seller have the proper patents)?
- Company strength and credibility (two people in their garage versus an established international company)?
- What type of Support for the capex, cost, hours, extras, what is included and what is not?
- Training: Where is it given, at what cost, when, and what is the cost of extra training if needed?
- Spare parts kits: What is recommended, frequency of anticipated repairs, and/or budget required?
- Are you helping to develop the equipment, if so can you get a non-compete or protection clause for a given period?
- When does the warrantee start to kick in and when does it end?
- What exactly is under warrantee and under what conditions (the agreement should be provided/attached)?
- How many items are we really buying (single unit, group of units)?
- Is the city ok with the installation of the equipment (especially if installation is outside)?
- Is the landlord ok with what will be installed inside or outside the building (if you are a tenant)?
- Is your insurance company aware of what you are buying and installing, are you still covered?
- Is this a new technology and if so, has it been fully tested elsewhere before?
- For how long is the quoted price good for and is it for everything in the quote?
- Is everything in the quote of the same currency?
- Bonus 1: Has someone from a legal department/firm reviewed the agreement?
- Bonus 2: Are there any grants or research and development credits or incentives that you can get when buying the equipment, how about energy savings?
Real Estate - Restoration Clauses
Real Estate - Restoration Clauses
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