Photograph of someone holding a penWhile much of the
heat has gone out of talk of scandal and fraud surrounding some
leases brokered by Shire Leasing, a number of brokers are finding
some suppliers are still unclear about the office equipment leases
they are attempting to sell.

“As a broker, we have issues with some
suppliers, especially those supplying photocopiers,” says Alex
Read, director at Portman Asset Finance. “They mark up contracts
significantly, and yet when you price check, the assets are only
worth a fraction of the value of the lease: the remainder is a call
package and/or maintenance contract. Some suppliers are not
explaining this to customers, who don’t understand how the contract
is structured. Lenders know that the equipment is only part of the
deals and so are very wary of this type of asset. Office equipment
is very hard to finance at the moment.”

Yet some suppliers argue that
increasingly complex equipment, and the changing needs of
customers, result in a need for more sophisticated lease
agreements.

“There is more demand for the
provision of services and for a single lease solution,” says Rod
Barthet, group sales and marketing director at Annodata, one of the
largest independent office equipment distributors in the UK.

“They don’t want a disparate supply of
equipment and the procurement process is converging: one department
taking care of it rather than several, for example. Customers also
want to outsource. This is pushing up the value of transactions and
leading to more sophistication in contracts.”

Rather than exiting the market, he
argues that funders simply need to ensure they have the right
processes in place to write quality business.

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“Funders need to understand the nature
of the assets, which have become more sophisticated; the market;
and, importantly, they need to understand the quality of the vendor
introducing the business. Funders ought to be focusing on the
technical and contractual capability that a particular vendor
has.”

Barthet says the contract must carve out the value of the assets
and the performance risk for funders, while wrapping the finance
agreement to suit the needs of the customer, meaning that a
vendor’s skill-set must be up to mark.

 

See also:

Business equipment defaults
decline