When it comes to identifying areas prime for cost cutting, equipment lease accounting arrangements are pretty far down most CFOs' lists. For many companies, especially those not in manufacturing, leasing revolves around dozens of agreements spanning many thousands of pieces of equipment, such as personal computers and telephones. For others, it involves a fewer number of large pieces, such as transportation vehicles and equipment. On the surface, even when taken together, these transactions may be relatively small when compared to other line items. But such conventional thinking didn't stop Dave Huber, vice president of financial planning and analysis at Horizon Healthcare Services Inc., from taking a closer look at the $5.5 billion not-for-profit insurance provider's leasing processes soon after he joined the company. "The way we evaluated leases was overly simplistic, making decisions based just on interest rates," says Huber, who explains that most of the company's leasing was for servers, PCs and laptops used by Horizon's 4,500 employees. "My intuition told me we weren't doing this as efficiently as we could be. People didn't realize we had a problem."


After his own evaluations suggested a closer look was needed, Huber brought in consultants American River Partners, an equipment lease consultancy based in Cohasset, Mass. The team found that computer servers were almost never returned to the lessor on time, often because they contained an important project that could not be stopped while new equipment was installed.

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