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TIPS ON ASSET MANAGEMENT
February 28, 2018
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| Best Practices

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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TECHNIQUES TO HELP STRUCTURE OFF BALANCE SHEET FINANCING
February 27, 2018
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| Best Practices

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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STEPS INVOLVED IN MONITORING YOUR LEASES
February 27, 2018
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| Best Practices

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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HOW TO COUNTER COMMON OBJECTIONS IN LEASING
February 25, 2018
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| Best Practices, Poor Practices

It is not uncommon in the course of marketing your leasing business, whereby you come across stiff objections from prospective lessees, either real or perceived. This equally applies to all types of business. More importantly, you should know how to counter each objection keeping in mind that real objections do not really have a counter. You need to learn how to dance around them. The list of common objections to leasing includes: i. Leasing is more expensive ii. The…

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HOW EQUITY CONTRIBUTION CAN IMPLICATE YOUR BUSINESS
February 24, 2018
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| Poor Practices

It has become imperative to bring to the fur the negative impact of equity contributions in leasing transactions and to alert you of its consequences on your investment. Perhaps to have the commitment of the customer, many lessors ask for equity contribution from the customer, while this is not illegal, it connotes a different transaction entirely, which is not leasing.  By its legal nature, leasing does not envisage any proprietary right on the lessee during the entire duration of…

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FACTORS TO CONSIDER BEFORE FINANCING AN ASSET
February 23, 2018
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| Lease Advice

As a lessor, there are certain factors you need to put into consideration before you finance any asset. This will enable you determine whether an asset is worth financing or not and thereby enhance your profitability. They include: What is the purpose for the lease? Does the lessee have sufficient cash flow to make payment? Does the lessee have sufficient capital to provide a financial cushion in times of stress? Does the owner provide support for the company and…

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OPERATING LEASE: THE FUTURE OF LEASING BUSINESS
February 22, 2018
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| Lease Types

In the recent times, it is imperative to fully understand as a lessor that the business of leasing has tilted towards operating leases, due mainly to the operators’ response to market changes. This arises from the dictates of market by corporates willing to divest from other ancillary duties thereby contracting it out to firms that specialises in such duties, this gives them the priviledge to focus squarely on their core business. Equipment Leasing Act (ELA 2015) Definition of Operating…

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10 ENDS OF LEASE STRATEGY
February 19, 2018
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| Lease Advice

Generally, the stronger your position as a lessor, the stronger your stands in the negotiation process, Amembal&Halladay (1995) gives the following 10 key steps to developing a successful end-of-lease strategy, maintain positive environment during negotiation process and promote a favourable outcome: You should always look for win-win situations. If the lessee has the perception that you have made certain concessions, it will feel more satisfied with the final outcome. You should always start negotiations by asking for more than…

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REQUIREMENTS FOR LEASE AGREEMENT
February 18, 2018
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| Industry Laws

FINANCE LEASE i. Statement to the effect that the lease is Finance  Lease ii. Description of the asset to be leased iii. Total rental or instalmental lease rental payable by the lessee iv. The date which rental is payable v. The estimated price of the equipment vi. Statement as to the knowledge of the supplier of the asset that it is for a lease transaction. vii. A clause affirming the title of the lessors viii. On termination by expiry…

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PROTECTIVE MECHANISM UNDER EQUIPMENT LEASING ACT
February 17, 2018
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| Lease Advice

  The Equipment Leasing Act 2015 provides that: i. The lessee shall not remove the leased asset from Nigeria without the written consent of the lessor ii. The lessee shall be liable for repairs to damage caused by his act, agent or servant or any third party to a leased equipment (s, 24) iii. Lessor is generally not liable for any defect in fitness for purpose of leased asset, except the lessee suffers loss as a result of reliance…

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