If your company is like most businesses, you lease equipment. Research indicates companies can improve their leasing processes, decrease total financing costs and save time.
One of the best ways to accomplish this is with a detailed Request for Proposal (RFP) that is entirely dedicated to equipment leasing. This RFP is separate from the equipment request and only deals with the financing. The purpose of this specific RFP is to protect the financial interests of your company. Written effectively, the lease RFP works as a tool to help ferret out - and remove - hidden costs specific to lease financing.
Proper preparation of the lease RFP is crucial, and it begins with organizing the RFP team with the right members, then developing your budget and timeline.
Recruit the team.
1. Select the equipment and leasing RFP team from staff involved in the financing, maintenance and operation of the equipment.
2. Consider hiring an independent RFP specialist experienced in drafting and analyzing the leasing portion of the RFP. This specialist guides you through the confusing double-talk of leasing, allowing you to keep focused on your day-to-day operation. If your company plans to create the RFP for a lease line of credit, the specialist will be helpful in focusing on the common lease traps and how to steer through them.
3. Discuss the tax benefits and implications of leasing with your company accounting and tax departments.
4. If the dollar amount of the investment is large or if your company is privately held and the leasing companies require personal guarantees from the owners or partners, consider adding your company attorney or a representative from your in-house legal staff to the RFP team.
Budgets and timelines.
1. Don't get carried away with the equipment's bells and whistles that you read about in industry publications. The needs of your business are not the same as the wants of equipment operators.
2. Your budget is your business. Don't let the equipment dealer or the leasing company salesperson know how much you plan to spend.
3. Include possible financing alternatives. Be specific. Suppliers and manufacturers may have interesting financing options including special leasing plans or low interest finance plans.
4. Remember there is no such thing as a free lunch or interest free money.
5. Ask for the total equipment cash purchase price. Never focus exclusively on the monthly payment. Look at the total cost of the lease over the life of the contract. Always read the fine print.
6. Establish timelines and require bidders and the lease review team to adhere to them.
Many details go into developing the RFP that is driven by your business needs. If companies are not experienced in tailoring lease RFPs or do not review and negotiate leases frequently, they might consider retaining the services of an independent lease review specialist. An independent lease specialist is not aligned with a leasing company or equipment manufacturer. The specialist assists companies in all phases of the lease selection, bidding and negotiation process, saving companies hundreds of thousands of dollars on every lease.
For more information on equipment leases and RFPs, visit LeaseSpeak.com.
Lease Request For Proposal (RFP) - How to Use it to Save Time and Money