Have you considered the provision of an in-house leasing capability to lease, as well as sell, your equipment on to customers?
During these tough economic times, equipment manufacturing companies are increasingly looking for ways to improve their profitability. The option of leasing to customers means that lessors can profit from interest charges made against these leases.
What other benefits can a lessor experience?
- Secondary Lifecycles – Value can be extracted from assets being leased under secondary lifecycles in the form of re-leased equipment, which is then passed to customers normally unable to afford new equipment leases.
- Increased Customer Retention– With the customer being committed for the duration of the lease contract, there is less likelihood the customer’s business will be taken to a competitor.
- Increased Upgrade Adoption– There is an increased chance a customer will either upgrade to new equipment or want to lease new equipment at the end of their current lease.
- Reduced Customer Impact– With a reduced initial outlay for customers adopting a lease contract than making a cash purchase, customer’s cash flows can be flattened and banking credit lines maintained.
- Improved Pricing Flexibility –Leasing allows manufacturers to cross-subsidise between margins made on leasing with those made on manufacturing or services.
- Improved Revenue Streams– Additional equipment leases result in greater overall equipment sales increasing related revenue streams on warranties, services or consumables.
So why is leasing not more popular?
Ironically, one of the main drawbacks of any leasing operation has been the cost of implementing the leasing solution itself, both in terms of time and cost. And historically, lease system implementations have inherently been complex, as they introduce the need for new lease authoring, contract management, billing schedule and equipment returns processes within the business, all of which tend to be more multipart than the equivalent standard sales processes. Further, the accounting treatments associated with leasing also tends to be more complicated.
How can you minimise the implementation pain?
Claremont recognised that the pain associated with implementing a lease solution was deterring many prospective lessors from pursuing a leasing operation within their businesses. However, due to the lease system definitions, processes and accounting used by lessors being similar, Claremont took the initiative to develop a standard lease system deployment package known as ‘Lease 100’.
Claremont’s Lease 100 solution
The Lease 100 solution provides prospective lessors using Oracle’s Financials applications with a fixed scope, fixed price and fixed timeline implementation of the Oracle Lease Management module. The solution delivers the full potential of the Release 12 Lease Management module allowing lessors to manage the full lifecycle of a lease contract from contract creation, maintenance, billing and collection and termination to the returns and re-marketing processes.
The Lease 100 solution comprises of a full set of pre-defined processes, system configurations and templates alongside a pre-defined project implementation plan. Each of these tools have been developed based on Claremont’s numerous Lease Management implementations over the past twenty years. These tools provide clients with an accelerated approach to their leasing solutions, whilst de-risking their implementations.
What is the Lease 100 functionality?
The Lease 100 solution manages the full lessor lease lifecycle providing lessors with the following lease management functionality:
- Sales Quotes to Credit Approvals: Lease sales quotes can be created against prospects, including quoting for Finance or Operating leases. Payment structures can be linked to these quotes and varied throughout the year, depending on the contract. Plus, quotes can be validated using the credit approval process with approvals automatically triggering the equipment shipping process.
- Shipping: Integration with Oracle Order Management ensures the shipping of equipment is seamless. Each shipment activity triggers the creation of an equipment system record used for installation and tracking purposes.
- Contract Creation: Lease Contracts are automatically created at the point all equipment on a contract is shipped and installed. The contract can be reviewed, signed and updated before activation, which in turn generates the associated lease accounting entries that are passed into the Oracle General Ledger.
- Contract Billing: The billing process is fully automated based on the contracts payment schedule. The Lease 100solution also provides the ability to create ad-hoc charges and credit memos against the contract with tax liabilities being integrated into the E-Business Tax Module.
- Contract Management: This functionality provides ongoing contract maintenance including extensions to the contract term, the addition or cancellation of insurance or the changing of a customer’s billing address.
- Contract Termination and Asset Return: The Lease 100 solution includes a comprehensive termination and asset returns process. Contracts can be terminated, allowed to expire or can be terminated early. Remaining obligations associated with the contract can be rolled into a replacement contract. Plus, this solution also provides the ability to purchase, return, re-lease or scrap the equipment.
- Sell offs: Should pools of lease contracts need to be sold off to investors, then it’s a simple process to automatically create the necessary invoices, alongside regular disbursement payments.
Summary
With manufacturers struggling to identify new ways to increase their bottom lines, the leasing of equipment is fundamental to help them grow their businesses into existing and new markets. It also helps maintain customer relationships as well as opening up new revenue streams.
Claremont’s Lease 100 Implementation approach allows the implementation of a Leasing solution, installed and fully supported by Claremont’s experienced leasing consultants. With our implementation methodology, you can be sure that your organisation will be ready to start leasing within 100 days, allowing you to stay calm throughout the implementation cycle – after all, it is only leasing!
If you would like further information about how your organisation can benefit from Claremont’s Lease 100approach to Oracle Lease and Finance Management, then contact us directly. You can email us at info@claremont.co.uk or phone us on +44 (0) 191 206 4152.