Category: Best Practices

Structuring a lease involves determining the periodic lease payment  based on the  terms of the lease, in such a way as to cover all costs associated with the lease investment and the target rate of return, while remaining competitive in the market.  Our focus is to consider the various methods and steps involved in structuring leases of various payment configurations and terms. Major structuring issues in leasing. Every lease contract contains special features and attributes structured or built-in by…

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Asset Register: maintenance of an up to date register of leased assets is very vital to the management of the lease portfolio. The asset register is better maintained by a computer program and should contain information such as name of the leased asset, serial number, tag number, location of the asset, name of lessee, servicing date, commencement date, terms of lease, cost of equipment, residual value. The purpose is to enable you to keep track of all the leased…

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Apart from checking the standing of the lessee, you also have the responsibility of ensuring that the asset under lease is well managed. This is fundamental to the overall achievement of your business objective, because the lessee will only be motivated to pay if the asset under lease is in existence and functional. The fact that you have little or no control on the usage of the equipment makes this task difficult. These include: Maintenance of Lessor’s Legal Right:…

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In the course of your operations, if a lessee insists on off balance sheet financing, you must first of all ensure that the lease does not meet any of the 5 criteria including: i. Automatic ownership transfer ii. Bargain purchase option iii. Lease term equal to or greater that 75% of the asset’s economic life iv. Present Value of minimum lease payments equal to or greater than 90% of equipment cost v. Special purpose equipment vi. Techniques to achieve…

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When servicing your customers, there are series of activities that you must perform to ensure that you are monitoring your investments. From the beginning of the lease to termination, these activities must be well coordinated, to ensure that the transaction is managed efficiently and effectively in line with the agreements reached between the parties. i.  Regular visit to the lessee – regular visit to lessee at his premises will give you first hand information on the ongoing performance of…

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