Very few organizations measure the financial performance of capital equipment leases once those leases come to conclusion. Since capturing this information critical to driving continuous improvement of the capital equipment lease program, it is necessary to put procedures in place to achieve the following:
1 - Ensure lease language remains consistent: Lease schedules for capital equipment and any associated riders or other documents introduced as the program, is ongoing should be reviewed before signing:
- Ensure that the terms and conditions, pricing and other details match the agreed upon template
- Analyze any amendments or other new documents to determine how these changes would affect financial performance
2 - Track all payments for each lease agreement: The only way to both ensure that the capital equipment lease program is performing as expected, and improve the program is to:
- Measure the all-in cost of each capital equipment lease at it comes to conclusion
- Use the all-in cost measurement results to drive continuous improvement
3 - Adjust lease versus buy based on performance: All-in cost analysis of capital equipment lease schedules performed as the leases come to conclusion provides information, which can be used to improve the lease versus buy analysis.
Renegotiate with lessors every few years, particularly around the time of any significant buyout or extension negotiations to ensure improved performance:
Sync lessor selection with other key lease decisions: It is critical in running a capital equipment lease program that the lessee control the timing of various events. Key among these is managing vendor selection timing. A lessor low risk lease sourcing selection process should be timed in part around any large end-of-lease or other decisions to provide leverage on both improving lease agreement terms as well as lower other costs.
LPRS experts help clients maintain Capital Equipment Lease programs to ensure they perform as expected, measure lease program performance and drive continuous improvement through low risk lease sourcing and vendor selection.
