The foundation of a best practices-based capital equipment leasing program is an effective lease versus buy analysis. To be effective the lease versus buy analysis should be based on an analysis of the existing program’s financial performance along with the proposed rate and the terms and conditions of the proposed lease documents. Accounting for capital equipment leases - capital lease vs. operating lease structures and analysis - should also be taken into consideration.
Capital Equipment Lease Analysis: A comprehensive assessment which provides a baseline for program financial performance improvement.
Understand Equipment Lease Agreements: Detailed understanding of the risks embedded in a master lease and related documents are critical for the development and maintenance of a robust lease vs. buy analysis.
Lease Rate: The key to sourcing low cost and risk equipment lease contracts is to look beyond the lease rate. It is important to recognize that the lease rate is not an interest rate. Additional analysis is required to compare these rates to other available sources of capital – including cash.
FAS13 and Other Accounting Rules: Keeping tabs on the long-delayed FASB / IASB convergence as well as a review of a firms approach to accounting for leases is critical to structuring a program which will achieve the anticipated financial results.
LPRS experts help clients design an effective lease versus buy analysis which is a key element of a best practices based capital equipment leasing program.
