5 Most Common Equipment Leasing Mistakes

Equipment leasing is often a crisis most finance executives have to deal with, more so, to reduce the cost of end-of-equipment lease buy-outs. Leasing experts known to offer effective, analysis-driven and rapidly-deployed end-of-lease costs reduction services are suggesting there are common mistakes companies’ senior level finance personnel might want to avoid to reduce lease costs from inception to end-of-lease.

· Not being mindful of all the equipment leasing options available. The lack of complete information about what leasing options that can be a fit for a company can hinder a company’s capacity to change with its industry. The goal is to get the equipment needed, when needed, and in a way leasing costs can be accommodated by the company to continue to grow. There are, for instance, seasonal industrial equipment financing programs and payment deferred programs a company should be made to be aware of.

· When heavy equipment financing selected not a match to a company’s cash flow. Companies do often have swings in income generation. For most companies production targets are seasonal, therefore, selecting industrial equipment leasing that allows making interest-only payments during the down swings can keep company leasing costs sustainable as possible. There are programs also for a company bringing in larger profits during its peak season to make larger payments. And paying out the financing as early as possible is another possibility for a company to reduce its lease costs.

· Not having a company’s business plan, finances and statements in order. When senior level finance personnel bring to the lease negotiations the company business plan, finances and statements; that as such empowers a good industrial equipment leasing company to better determine how much the company can afford and what equipment financing program that works best.

· Poor choice of a financial provider. A senior level executive for company leasing equipment is well served only by having experts that leverage rigorous analysis and vast experience to deliver the savings the company needs for growth. A provider who secures better rates with various options together with good customer service can make the lease inception process to end of lease as easy and effective as possible.

· Not acquiring the equipment needed. When a company leases equipment that is outdated or equipment that lacks the features the business requires, it constrains a company’s growth. By equipment leasing a company should be able to address the problem of obsolescence. To obtain equipment that may be outdated in a short period of time should be in a manner that the lease should pass the burden of obsolescence onto the lessor.

These are just a few critical oversights senior level financial executives should be mindful of to save them a significant amount of time and lease costs. Companies that are well supported with the structure and capacity to track the all-in cost of leasing and are aware of the risks and costs of leasing are always better prepared to deal with any unexpected lease costs especially when a company decides to stop leasing or switch lease vendors. Always a viable strategic approach for a company to understand the full cost of a lease program, or the leasing-based financial and operational risks they are running on an ongoing basis. Expert advice is thus key to set up lease programs properly and to minimize or eliminate unexpected costs and risks. Senior financial executives are better served when leasing experts share critical data about the lease portfolio’s performance and risks and are helped to develop and implement applicable risk and cost mitigation strategies.