Current statistics may under report the size of the leasing industry by between 30% and 50% by not including businesses where a form of leasing underlies the products and services, according to The Leasing Foundation.
The finding came in the Foundation’s report ‘Redefining the Leasing industry’, which sought to understand if products such as hire, rental, managed service contracts, subscription contracts and contract hire could be considered leasing.
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The report was based on interviews with 20 industry leaders, including one major organisation whose turnover was: "The size of over three quarters of the total reported UK leasing industry annual turnover."
According to the Leasing Foundation, most of what the organisation does is leasing, however; "This organisation rarely calls its contracts ‘leasing’ and prefers to agree a name for the contract with its customers – mainly managed service contracts or subscriptions contracts – which they believe have different balance sheet considerations for both parties to the contract."
The report adds the company admitted "they really are leases, but with different accounting treatments depending upon what you call them."
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By GlobalDataWhen asked to define leasing, responses included a variety of definitions, including the recognition that services are frequently added to and are part of the contract.
Over two separate questions, the Foundation found that there were many products considered similar to leasing, such as hire purchase and invoice discounting, however almost all preferred a narrow definition to describe their activities.
There were also questions on the upcoming lease accounting rules. According to the report; "Many of our interviewees had no view. A number didn’t care about the changes. A minority were against the change especially in terms of compliance costs."
Finally, most interviewees agreed that off balance sheet financing has a place in the financing of corporate businesses.
