Office Equipment Leasing
Leasing is commonly utilized to acquire office devices in today’s service world. Although, there are a couple of things you need to consider prior to entering any lease contract. Once the document is performed there is little you can do. Please pay attention to a few of the below locations to insure that your agreement is fair for both parties. We believe that nine out of ten clients never check out a lease contract prior to they sign it.
Read Your Lease Prior to Signing It
Constantly ask to see a copy of the arrangement prior to agreeing or granting a particular supplier your organization. For many years we have had the unfortunate scenario of experiencing clients who desired to switch Vendors but had no method out. Their only alternative was rolling over the payments into their new lease or to continue paying both the existing vendor and the new vendor for service. By checking out the file prior to signing it, you may find a host of products that you never believed would be included in such an arrangement. The most essential things to try to find are End of Term Clauses, Price Increase Clauses, Automatic Renewal Clauses and what your Lease consists of.
Including Service and Supplies on a Lease
If you do not have the time to check out all of this details please read this. Never and we imply never, consist of service and materials in your lease arrangement. The easiest method to compare this is, if you were buying or renting a vehicle would you buy all the gas (your toner) and all the oil changes (your maintenance) up front? Of course you would not so why would you do it with a piece of office equipment leasing? Below are couple of reasons that this is a bad concept.
JOE Company has a 5 year lease arrangement with a local workplace devices company. The agreement consisted of service, products and required a Minimum amount of month-to-month copies/prints. They are not delighted with the service and desire to either upgrade or have another regional Authorized Dealer assume the service. The only method to do this is to pay both vendors for the service due to the fact that you’ve currently dedicated legally to a regular monthly payment that includes service, materials and a particular quantity of copies/prints. The renting business isn’t concerned about the service, comparable to obtaining money for a cars and truck, they just want their payment. You can secure yourself by requesting that the service and products be invoiced directly from the Dealer on a regular monthly or annual basis. Avoid signing any Service and Supply agreements for more than one year.
Including Service and Supplies in your lease could impact your Buyout, which we will go over in more information later on. Often, the buyout is a percentage of the initial quantity funded. If the quantity financed was $5,000.00 for devices just, your normal Fair Market Value Buyout need to be someplace around $900.00 which relates to about 18% at the end of term. If you’ve consisted of the service and supplies for $3,000.00 (approximated) you have now financed $8,000.00, making your new buyout $1,440.00 at the same 18% rate.
You can have some fun with this one. The next time an Office Equipment Company puts a lease agreement in front of you that consists of all the service and materials, look them right in the eyes and ask the following concerns.
- Which crystal ball did you use to know we would produce x quantity of copies/prints over the next five years?
- What happens if we are not pleased with your service in a year or 2?
- Can we leave you? Does this impact my buyout?
- What happens if I do not produce that quantity of copies/prints, do you credit me? What if your business goes out of company in year three?
You will be surprised at the bewildered appearance on their face. With scanning, computers, and other systems/software lots of business’s copy/print volumes are significantly lowered from previous years. That is why it is vital the service and materials are invoiced separately and not consisted of in the Lease contract.
We recently found a similar situation with a Major Account. The client was two years into a 5 year Cost per Copy/Print Lease. The expense per copy/print was.019 per copy for several makers. They were kindly enabled, signed and agreed to a Guaranteed Minimum Monthly Copies/Prints of 1,000,000 each month. That corresponds to $19,000.00 each month. The issue is, after close examination, their actual copies/prints monthly had to do with 600,000 per month. That now turned their expense per copy/print into.032 since the minimum quantity was not met and now $7,600.00 monthly was being wasted! The existing vendor’s sales individual continuously continued to tell them that their expense per copy/print was.019, which it was not. Unfortunately, that customer is going to need to wait up until completion of the term to get more competitive propositions, leave the lease, and worst of all they are going to spend for millions of copies/prints they never really produced unless they demand it be customized.
Never ever and we imply never, consist of service and materials in your lease arrangement. They are not delighted with the service and desire to either upgrade or have another regional Authorized Dealer presume the service. The only method to do this is to pay both suppliers for the service due to the fact that you’ve already committed lawfully to a month-to-month payment which consists of service, supplies and a certain amount of copies/prints. The next time an Office Equipment Company puts a lease contract in front of you that includes all the service and supplies, look them right in the eyes and ask the following concerns. That is why it is crucial the service and supplies are invoiced individually and not consisted of in the Lease contract.