Alan Gregory
5 minutes length
Posted: 11th August 2015

Getting A Good Leasing Deal on an Asset You‘ve Not Leased Before


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Procurement professionals often have to lease a broad range of equipment types. From refrigerated trucks to warehouse shelving, there is a considerable scope of potential assets to arrange lease documents for. Although most of us have become well-versed in arranging leases for a variety of assets, every now and then, there is the chance that we’ll come across something we know nothing about.

With the lease inception and associated document negotiation being a pivotal milestone in the long-term success of a lease agreement, it is vital that we are confident in securing the best lease schedule to suit the company’s internal requirements. So how do you ensure a competitive leasing deal on an asset you’ve not dealt with before?

1. Look it up

It may sound obvious, but that’s all the more reason to actually do it. You don’t need to make it your specialised subject on Mastermind, but it is well worth undertaking a bit of background research on what it is you are needing to procure. What is it used for? How much do they normally retail at? Has the company procured them before? Even knowing simple facts about what the asset actually is can make a big difference in how well you negotiate with the lessor allowing you to make better leasing deals. Going into negotiation blind may trigger an opportunistic lessor to take advantage of your ignorance – even knowing basic facts can provide the illusion you need to defend against unscrupulous funders.


2. An asset is an asset

Focus on what you would require from any asset, regardless of its size, shape or use. A photocopier is very different from a vending machine, but both may require maintenance coverage or perhaps your company wants to agree exclusively finance leases. Realistic asset return conditions, end of lease options and reasonable interest rates are all areas that procurement leaders know need to be included regardless of the asset and will help structure your negotiations.


Also, internal lease accounting requirements set by the business are another aspect of a lease that can help direct the type of lease you agree and what terms should be included. Once you’ve secured what you know you need as standard, then you can look into the specifics.

3. Ask the operations team 

As the ones who will be using the assets regularly, they most likely know more about its functionality. Find out what they need from the asset; are there certain operational or protective clauses that need to be included? Does the lease require additional services such as maintenance, insurance or installation?

If they want a specific model or specification, find out why – the more you know about why the business needs the asset, the better your understanding of what is required from this lease. These are the people who will be using the equipment on a day to day basis and can give a much clearer picture on what features and issues may affect the negotiation of the lease. If this new lease is replacing old equipment, they’ll be able to tell you what worked and what needs improving from the last one.

Generally speaking, the operational users are often neglected from new lease arrangement, despite the fact that for the most part, they have the most interaction with the asset while in is in the possession of the company so will be responsible for maintaining the condition of the assets and the physical requirements listed in the lease so gaining their guidance should help produce a realistic lease agreement that suits the reality of the company.

4. Outsource for Guidance

There are now more places than ever to get guidance and advice on just about anything. Consulting a network of fellow procurement professionals who are sharing their leasing experience and expertise can be extremely useful and help influence your negotiation stance when it comes to researching an asset you have little to no experience with. These are numerous sources available:

LinkedIn and Forums – The groups section of LinkedIn is filed with thousands of procurement specialists asking, sharing and discussing numerous topics on a range of industries and asset types.

Independent Advisors – Specialised leasing experts who are not brokers, such as Innervision, are available to help with your lease arrangement. With an unbiased, privileged position within the industry and years’ worth of experience in a range of market sectors, their advice is unrivalled.

Lessors and Funders – There is no harm asking your trusted lessors for their advice on your next procurement. Depending on the type of lessors you are dealing with, they will most likely hold a bias towards their particular products and services to be sure to review their feedback and apply it to what will truly benefit your company. You may even be able to arrange a competitive leasing deal by involving them in the process early on, however always consult your trusted leasing experts before signing any binding lease documents.

 
5. Negotiate some fail safe options into your lease schedule

Whether you’re confident you’ve got the best deal or you’re slightly unsure, it is always good practice to have a plan B to fall back on if the lease doesn’t end up as perfect as you initially planned. Including clauses such as an early termination option and the ability to upgrade your equipment through asset refresh, can supply you with a safety net if the lease does go awry and help to reduce the expenses that may come with resolving an unexpected issue. Leases are long-term agreements so having an escape rope trump card could really come in handy.

When arranging a new lease on an asset you do not know much about, the most important thing to do is ask. There is no shame in doing your research and consulting your colleagues and fellow procurement specialists, especially if it is likely to aid in your negotiations. With so many resources available and globalisation of business making communication amongst industry peers more convenient, there really is no reason to struggle when dealing with assets you’ve not got much experience with. As long as you do your research and are open to learning a few tips and tricks, you’ll be able to arrange a lease for anything you need; the sign of a true procurement specialist.

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