The Evergreen Lease Agreement - How to reduce costs, fulfilling the leases equipment

During my tenure as principle dealer, I had a conversation with an office equipment leasing company. We were discussing the return of a large population of multi-function copying equipment by a mutual client. For this client, my dealer was left on top of all lease requirements for notification of intention to return equipment to the lease expires. On behalf of my client, I was making arrangements for the return of the material. The executive leasing company was reluctant to provide authorization information back to the equipment.

To help me understand why I was listening to the reluctance on the part of the executive leasing company, I started doing survey questions to determine if he was our customer had not respected the terms of the lease. I quickly confirmed that all the provisions of the lease had been followed to the letter. The real problem was that the leasing companies expected their leases to renew for one additional renewal period.

The leasing company executive has admitted that their integrated business model that will receive additional revenue of at least one renewal period. The remaining position (what they expected to receive by selling equipment to someone else) was set up additional revenue expected. If you have not received the renewal of revenue, their profits were off (down) for this operation.

Why Renew Lease

I asked the manager how could they be so sure that the equipment would go to renewal. Without hesitation, he replied that historically the majority of their leases equipment to do. After getting up off the ground, I asked his opinion because many leases that went under renovation. He said it was either the lack of monitoring of the expiration of the lease or turnover in the position of the customer who was responsible for notifying the leasing company in a given period of time (specified in the lease). Most leases are written copiers for a period of 5 years lease. Turnover (both promotions or departure) within a customer's business will usually occur before the end of the lease. In addition, during intense days in office, no one stops to document the date of expiry of the lease. It seems so far away and therefore useless at the moment.

Leasing companies do often (usually quarterly) equipment suppliers to send a list of their portfolios of lease with the leasing company in the hope that the vendor will upgrade equipment and expand customer relationships with the customer leasing companies lease. If the vendor equipment is paying attention to their customer base, which will warn of the approaching expiration of the lease (and try to upgrade your equipment). If a renewal lease equipment, which makes it very difficult (read expensive) for an equipment vendor competition to improve economically the material before the expiration of the renewal period. This strategy was built intentionally to give the incumbent equipment vendor (and leasing), a financial advantage in improving the equipment before the expiration of the term of the contract renewal. A renewal of the lease limits the options, which is never good for you.

Only the supplier of the charge, which we shall use the same leasing company can upgrade equipment on a lease renewed without penalty. Any other combination of equipment vendors and / or leasing companies must pay the remaining amount of the renewed lease term (usually 12 months).

Why this matters to me?

The main reason you do not want to renew the lease is that they are forced to pay the costs of new equipment (eg, pay the same lease) for your old equipment and well used. In essence, you have no chance. Conversely, if you do not get taken home by renewing the lease, you can always lease equipment more highly productive and characterized by the cost or less. Another option available is to unleash your own equipment (assuming it worked fine) for a shorter term with a significant discount.

There was some flashback of this redevelopment plan intentional when customers are so angry over the renewal that refuse to work with both suppliers and leasing companies. As a result, there has been a softening of some of the stringent requirements. You should check the verbiage in the lease being in the section entitled something like "End of Lease" or "Renewal" to determine the expiration policy.

What can you do?

To keep your company from getting trapped in the trap of renewing the lease, setting an appointment calendar on your computer support staff other than to remind you to send the notice of lease expiration time (usually 90 to 120 days in advance of the contract lease expires check your lease for specifics). This should prevent the rotation of personnel to erase memory of that necessary step. Another option is to create "delayed" send e-mail from different computers to send to several staff members to remind them to send the lease expires.

There are also free external calendars that can be set up to send an e-mail reminder was sent to more people if they are disposed of organizing all the information by the previous users of a computer. Calendar.yahoo.com applications like Google Calendar and can be set to provide e-mail reminders to ensure more people to cover your sales and promotion events. In this way you can notify the leasing company in a timely manner.

As you perform a new device, a 30-day renewal required before approving. If you miss the deadline for notification of the lease is renewed for 30 days. Remember that you must provide written intent to return equipment to prevent or end the cycle of renewal.

When you send the notice period be sure to include the number of lease, the brand copier, indicate your intention to return the equipment at lease expiration and return information required for authorization. Address the letter to the same address to send payments due under the lease (which is on your bill monthly rent). Be sure to include your company name, mailing and e-mail addresses, and phone numbers on the letter. There is a generic model of the lease term available for download on our web site www.bottomlineadv.com on the "Resources". Be sure to send the notice to return via certified mailing method. The options include registered mail, courier, as well as several multi-day delivery options until you receive a tracking number. You must be able to prove that the notice arrived at the headquarters of the leasing company within the period specified in the lease agreement ....