Having spent a number of yearsboth in the equipment-leasing industry and as a corporatetreasurer, I am still surprised by how often companies appear tojust enter into lease transactions with no more foresight than thestroke of a pen. In many cases, they enter a deal worth hundreds ofthousands, or even millions, of dollars over multiple years aftervery little review or analysis of the lease transaction's terms andtrue costs over time.

Most of the corporate lease-procurement effort revolves aroundnegotiation of the equipment's purchase price at the beginning ofthe lease. When that is completed, the supplier's captive leaserepresentative steps in with a lease contract, which the buyerimmediately accepts without any meaningful review or pushback.

Such an approach may leave a considerable amount of money on thetable. Quite often, lessees negotiate a good cash purchaseprice, only to relinquish much of those savings in the leasefinancing. The lessee's finance staff don't do an adequate analysisbecause they don't have the time or expertise, which enables thevendor to recapture margin it forfeited in price negotiations.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.