| During my tenure as a dealer principle, I had a | | | | This strategy was constructed intentionally to give the |
| conversation with an office equipment leasing | | | | incumbent equipment vendor (and leasing company) a |
| company executive. We were discussing the return of | | | | financial advantage in upgrading the equipment before |
| a large population of multi-function copy equipment | | | | the expiration of the renewal lease term. A lease |
| from a mutual customer. For this customer, my | | | | renewal limits your options, which is never good for |
| dealership had stayed on top of all the lease | | | | you. |
| requirements for notification of intent to return | | | | Only the incumbent equipment vendor who agrees to |
| equipment at lease expiration. On my customer's | | | | use the same leasing company can upgrade |
| behalf, I was making the arrangements for the return | | | | equipment on a renewed lease without penalty. Any |
| of the equipment. The leasing company executive was | | | | other combination of equipment vendor and/or leasing |
| reluctant to provide return authorization information for | | | | company will have to pay the remaining payments of |
| the equipment. | | | | the renewed lease term (usually 12 months). |
| To help me understand why I was hearing the | | | | Why Does This Matter to Me? |
| reluctance on the part of the leasing company | | | | The primary reason you don't want your lease to |
| executive, I began asking probing questions to | | | | renew is that you are being forced to pay new |
| determine if he felt our customer had not fulfilled the | | | | equipment costs (i.e. the same lease payment) for |
| terms of the lease contract. I quickly confirmed that all | | | | your old and well used equipment. In essence, you |
| the lease's provisions had been followed to the letter. | | | | have no options. In contrast, if you don't get snagged |
| The real problem was that the leasing company | | | | by the lease renewal, you can always lease more |
| expected their leases to renew for at least one | | | | highly featured and productive equipment for the same |
| additional renewal term. | | | | or lower cost. Another available option is to release |
| The leasing company executive admitted that their | | | | your same equipment (assuming it has been working |
| business model incorporated them receiving the | | | | well) for a shorter term at a significant discount. |
| additional revenue of at least one renewal term. Their | | | | There has been some backfiring of this intentional |
| residual position (what they expected to receive by | | | | upgrading plan when customers are so infuriated by |
| selling the equipment to someone else) was set | | | | the renewal that they refuse to work with either the |
| expecting this additional revenue. If they didn't receive | | | | equipment vendor or the leasing company. As a result, |
| the renewal revenue, their profits were off (low) for | | | | there has been a softening of some of the stringent |
| that transaction. | | | | requirements. You have to check the verbiage in your |
| Why Leases Renew | | | | current lease agreement in the section labeled |
| I asked the executive how they could be so sure that | | | | something like "End of Lease" or "Renewal" to |
| equipment would go into renewal. Without hesitating, he | | | | determine the expiration criteria. |
| answered because historically most of their equipment | | | | What Can You Do? |
| leases do. After getting up off the floor, I asked his | | | | To keep your company from getting snared in the |
| opinion why that many leases went into renewal. He | | | | lease renewal trap, set a calendar reminder in several |
| replied that it was either the lack of tracking the lease | | | | support staff's computers to remind you to send the |
| expiration or turnover in the customer position that | | | | lease expiration notice on time (usually 90 to 120 days |
| was responsible for notifying the lease company in a | | | | in advance of lease expiration-check your lease for |
| specific time frame (designated within the lease | | | | specifics). This should prevent staff turnover from |
| agreement). The majority of copier leases are written | | | | erasing memory of that necessary step. Another |
| for a 5-year lease term. Turnover (either promotions | | | | option is to set up "delayed send" e-mail messages |
| or by leaving) within a customer's business does | | | | from several computers to be sent to several staff |
| usually occur before the end of the lease. In addition, | | | | members reminding them to send the lease expiration. |
| during the course of busy days at the office, no one | | | | There are also free external calendars that you can |
| stops to document lease expiration dates. It seems so | | | | set up to send an e-mail reminder to several people in |
| far away and therefore unnecessary at the time. | | | | case your organization deletes all information from |
| Leasing companies do frequently (usually quarterly) | | | | previous users of a computer. Applications like and |
| send equipment vendors a list of their lease portfolios | | | | Google calendar can be set up to provide e-mail |
| with that leasing company in hopes the vendor will | | | | reminders to multiple people to assure you cover your |
| upgrade the customer's equipment and extend the | | | | turnover and promotion events. This way you can |
| customer's leasing relationship with the leasing | | | | notify the leasing company in a timely manner. |
| company. If the equipment vendor is paying attention | | | | As you execute a new equipment lease, make a |
| to their customer base, they will notify you of the | | | | 30-day renewal mandatory before you approve it. If |
| approaching lease expiration (and try to upgrade your | | | | you do miss the notification deadline your lease only |
| equipment). If an equipment lease renews, this makes it | | | | renews for 30 days. Remember you do have to |
| very difficult (read expensive) for a competing | | | | provide the written intent to return equipment to |
| equipment vendor to economically upgrade the | | | | prevent or end the renewal cycle. |
| equipment before the expiration of the renewal term. | | | | |
