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
Related Articles:Capital Expenditures and the Multiple Reasons for Their justification Don’t Forget the Grants Do you ask to reset the capex meter? Open Ended Question on Return on Investment Maintain, Refurbish, or Replace
You might also like:Five Things to Remember When Negotiating “opting out” Clauses Determining Your Real Estate Requirements 10 Things to Remember When Subleasing an Office Site Fixtures – How to Negotiate a Fixture Clause When Leasing a Site Save Money for Your Company, and Save the World at the Same Time