Is A Trusted Leasing Partner an Oxymoron?
Written By: Robb Stevens
It was John F. Kennedy who said: “Ask not what your country can do for you, but what you can do for your country.” In that same vein, I will suggest: Ask not what you can do for your leasing company, but what your leasing company can do for you!
Supply chain and purchasing professionals are a vital part of healthcare organizations. Tasked with keeping critical care technology current in hospitals, their responsibility is huge! With it comes not just coordinating what will be purchased, but also how it will be purchased. If there is no budget allocated for the purchase, what alternatives are there?
For a cash-strapped organization, equipment leasing solutions may abound, but it’s a great advantage to seek financing options long before equipment evaluations are finished and decisions are made so the best possible solutions can be identified. A financing decision on any equipment purchase (positive or negative) will linger long after equipment is delivered and installed, so proper care should certainly be given to such important decisions.
An equipment lease of any size is a significant commitment for an organization. There are plenty of unknowns and even potential risks to be mindful of – some of which can be difficult to understand or even detect if a decision maker is not at least reasonably well versed in leasing lingo. Some aspects of equipment leasing may take undue advantage of a customer – especially if they are not experienced or prepared for it. Some of the pitfalls in leasing are more obvious than others, but in one way or another, they will all cost a buyer more frustration, work, and ultimately money than they may have anticipated. Here are a few to be aware of:
- Lease Contract Language
(language that is non-negotiable, excessively, wordy or unclear often accompanies an enticing “too good to be true” lease rate. This can be a trap for customers that only look for the lowest payment.)
- Hidden and/or Excessive Fees
- Lease Deposit
- Lack of Clarity on Advance vs Arrears Billing
- Late Fees – Inflexibility and/or Excessive
- Early Payoff Penalty
- Interim Rent
- End of Term Options
- Evergreen Provisions
- Equipment Return Language Ambiguity
- Payment Frequency
- Lessor Payment to Equipment Supplier
- Misrepresentation or Over Hyping of a vendor’s “Preferred” leasing source
Upcoming editions of Med One To One will feature more detail on each of the above items. Managers focused on the daily grind of equipment acquisition decisions may not have frequent enough experience with leasing to even realize that such challenges exist or how to detect them in a lease contract. It can be a huge advantage then, for purchasing managers to identify and work with reliable leasing professionals. A trusted leasing partner can become an invaluable resource to any purchasing department.
To be such a partner, a lessor must at minimum, understand the organization’s needs and expectations and be ever-ready to present fair, honest leasing solutions to them. Once identified, a trusted leasing advisor can assist a buyer in the evaluation of lease pricing, structures, contract language, pitfalls to be aware of, and thus assist in the organization’s overall asset management strategy.
Even if a buyer/lessee typically obtains quotes from several lessors, a solid leasing advisor can serve as a go-to consultant to them even if they are not ultimately the lessor of choice. A lease advisor can also provide guidance on potentially concerning items with any lease they may be considering and offer an alternative solution if/when needed. Just knowing that pitfalls exist in leasing, buyers should proceed with their eyes wide open, arming themselves with the proper knowledge and expertise to minimize unnecessary harm.
As leasing professionals, one of Med One’s key responsibilities is to ensure that customers benefit from leasing and utilize our expertise within their equipment management strategies. We hear stories often from customers that have had bad experiences with other lessors. This is troubling because it casts leasing in a bad light when it should be viewed as a great advantage. When customers have a bad experience, they either completely turn away from leasing, or they are surprised by the overall positive experience they tend to have with Med One. Leasing is supposed to be a powerful and enabling tool rather than a “necessary evil.” Therefore, we work to ensure that all customers have a fair and straightforward experience. In this, we hope that leasing is cast in a more favorable light and leads to equipment buyers coming back for more.
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