Whether it’s a regional fleet of five or a national fleet of one hundred and five, companies that rely on trailers to transport their products understand the many advantages and benefits of leasing. In today’s challenging economic climate it can serve a vital operational and financial tool, facilitating efficient and timely delivery of goods, and contributing to a more prosperous bottom line.
The good news about trailer leasing is that with the maze of choices and plans available a program can be tailored to fit just about any situation. On the other hand, it also means that determining what’s right for you requires very thoughtful analysis of the many options. Working with an experienced provider who can effectively assess your situation and offer the best trailer leasing solutions is critical in this regard.
With the right partner and plan you can:
Preserve company capital and realize significant tax advantages
Simplify company operations and increase workforce productivity
Free up company personnel to attend to their main areas of expertise
Ensure that operations and equipment are within regulatory compliance
Get a better night’s sleep
Here are five important steps to help you make the right choices.
- Assess Your Business Needs and Priorities
First, evaluate your company’s financial situation to determine if purchasing, renting, or leasing makes the most sense. When compared to purchasing and financing, leasing preserves capital, and the payments are tax deductible. On the other hand, tax depreciation on a purchased unit may result in a greater amount of tax loss than can be written off. There might also be a “recapture” of the depreciation taken upon sale of the equipment that could result in additional tax liabilities.
Here are some other important questions to consider:
How can the funds that are freed up by leasing trailers be used to further improve our company?
How much of our internal resources do we have to commit to managing our trailer operations?
Does it really make sense to assign company personnel to oversee trailer operations or is it smarter to take a turnkey approach with a trailer leasing partner?
Although it may appear to be very early in the process, working with a trailer leasing expert to help find answers to these questions can save time and ultimately, money.
- Establish Partner Qualifications and Do the Research
When it comes to selecting the right leasing partner and plan, experience and trust are of primary importance. Bigger is not always an indication that a company is better suited to your company’s needs. Working with people who have a proven track record of implementing plans across a wide range of industries locally, regionally and nationally is a good indication of their capabilities, expertise and resources.
Today, leasing companies must be able to respond by providing well-maintained equipment, timely maintenance services to reduce trailer downtime, provide creative leasing options, and above all, be concerned about meeting the needs of the customer. So make sure yours has good “ears.” Are they someone who listens closely to all your issues, concerns and objectives? Do they understand your real needs? If so, the overall flexibility and customization of the plans they offer you will be a good match to those needs.
- Look at the Numbers… and Beyond
The lease rate on equipment is an extremely important consideration, but it is by no means the only one. While the leasing plan’s price may initially look attractive, on paper, there are a myriad of other important factors that impact the true cost.
And, when comparing the advantages of leasing trailers to other options like renting and financing, the cost of ownership is not only cash and debt service but can also include:
Equipment disposal costs
By freeing up capital through a comprehensive leasing plan consider what other things your company can achieve with the money that would otherwise be taken by the financial responsibilities of equipment ownership. A well qualified leasing company can advise you of the options and plans that make this possible and also help you to determine the true cost of ownership versus leasing.
- Think Short Term and Long Term
Selecting a well-suited leasing plan and the right partner will result in immediate benefits. First, your new trailer fleet will be more reliable and experience less downtime enabling delivery of products and goods on schedule. While this is true of purchasing equipment as well, initial, and future equipment issues during the lease term would be addressed and resolved by the lessor.
In the long run, leasing will also eliminate equipment obsolescence. As terms of a lease permit, equipment could be replaced or upgraded. Operationally, the supervisory and administrative activities within your organization will be minimized, freeing up staff to perform their primary responsibilities more efficiently.
If your plan includes maintenance and repairs, these will be addressed and resolved by the lessor in a proactive manner. On an ongoing basis, and according to lease terms, the compliance and regulatory issues would also be monitored and satisfied by the lessor.
- Match the Plan to the Priorities
When it comes to trailer-leasing plans one size does not fit all. The right one provides financial, operational and logistical benefits when properly matched to your company’s operations.
Here are some of the most popular types to consider:
Net Leases: The lessee is responsible for maintaining their equipment
Maintenance Leases: The lessee brings the unit to the lessor for the performance of maintenance work
Full Service Lease: The lessee manages compliance and maintains and repairs trailers regardless of its location
There are also lease/purchases options in which the lessee may buy the equipment at lease end for fair market value or a stipulated purchase option. Another alternative, sale/leaseback, allows the client to sell their fleet to the leasing company and lease it back. The lessee benefits from this plan by receiving proceeds from the sale of equipment that can be reinvested in their core business.