Having spent a number of years both in the equipment-leasing industry and as a corporate treasurer, I am still surprised by how often companies appear to just enter into lease transactions with no more foresight than the stroke of a pen. In many cases, they enter a deal worth hundreds of thousands, or even millions, of dollars over multiple years after very little review or analysis of the lease transaction’s terms and true costs over time.

Most of the corporate lease-procurement effort revolves around negotiation of the equipment’s purchase price at the beginning of the lease. When that is completed, the supplier’s captive lease representative steps in with a lease contract, which the buyer immediately accepts without any meaningful review or pushback.

Such an approach may leave a considerable amount of money on the table. Quite often, lessees negotiate a good cash purchase price, only to relinquish much of those savings in the lease financing. The lessee’s finance staff don’t do an adequate analysis because they don’t have the time or expertise, which enables the vendor to recapture margin it forfeited in price negotiations.

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