What Happens To The Canadian Equipment Financing Asset At The End Of My Firms Equipment Lease?

Missing . Solving The Mystery Of The End Of Term Lease Finance Option In Canada . What Should And Should Not Happen!

OVERVIEW – .Information on equipment financing and the asset lease in Canada . What are key factors at the end of a lease term that the Canadian business owner/manager needs to address?



Equipment financing in Canada via an asset lease . Billions of dollars of assets are financed via leases every year in Canada.. What happens to these assets at the end of the lease, and how are some of the asset disposition and sales issues handled by your firm or the lessor? Let's examine some of the facts relative to the Canadian marketplace for equipment financing. Let’s dig in.



Naturally a significant amount of time is spending at the inception of leases in determining the new or used value of equipment to be leased. In cases where used equipment is being financed there is a need for appraisals and inspections, which are usually performed by independent third parties who have a strong sense and professional experience in valuing these assets. In certain cases where a lessor has repossessed equipment and the asset is for sale then an appraisal is also a very valuable tool.



At the end of the lease, depending upon the structure and type of the lease, the business owner or financial manager must enter into negotiations to address the final disposition of the equipment. We must remember that your firm entered into what is known as an 'operating lease 'you have in fact opted to 'use' equipment, rather than 'own 'it.



That of course infers equipment being returned to the lessor, or, per the terms of your contract, it can be purchased. Purchasing equipment at the end of a lease has significant implications for you around the value and use of that equipment. Naturally if you intend to simply return the equipment the lessor is chartered with disposing of that equipment.



We also note that it is a prudent business decision for Canadian business owners to monitor the value of leased assets through the term of their lease, especially important as the lease approaches termination. As the lease approaches its end of term the lessor may also invoke its right to inspect the equipment, suggest return provisions, and, most importantly to the Canadian business owner, start to suggest the purchase price of the asset if in fact your firm wishes to keep the asset, if in fact you have entered into that type of lease.



WARNING – BUSINESS ALERT ! Make sure you ensure your lessor has the responsibility to notify your company prior to end of the lease term . If that is not agreed upon, diarize the lease end of term. Thousands and millions are made by leasing companies in North America who continue to bill at the end of your lease term, simply because that issue was not documented properly ! They wouldn’t do that, would they?


From the lessors perspective it wants of course to ensure a reasonable and proper value of the equipment. A major term in Canadian equipment lease financing is a term called 'fair market value '. That term suggests that the asset under lease has a value to someone in the marketplace assuming there are a willing buyer and a willing seller.


The business owner or financial manager will want to look back at the asset and understand any upgrades or maintenance that was performed on the asset. Business owners are encouraged to look out into the marketplace and determine what current values are - the internet has become a fabulous asset to lenders and borrowers in assessing the true market value and availability of many asset types.


There are hundreds, perhaps thousands of used equipment dealers, brokers, and remarketers who can provide solid input into the value of the asset. Naturally contact several sources rather than one is a prudent action for both the lessor and the Canadian business owner.As information is gathered the true value of the asset will emerge.


In summary, as a general rule it is incumbent on the lessor or finance firm to ensure proper diligence and procedures around assets coming off lease. The lender want to ensure they are made whole on the transaction, as leases are a combination of interest charged and asset realization at tend of term.

For the Canadian business owner proper care, maintenance, and on going valuation of the leased assets is a valuable investment in time and cost. This investment becomes more important as the business owner evaluates disposition options at the end of term. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor for the asset finance expertise you are looking for.








Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/equipment-financing-asset-lease-canada.html




7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com



Stan Prokop

Scientifically Proven ? An Asset Lease Whether Operating Or Capital Works For Financial Bridging of Canadian Business Financing

This Day in Canadian Business History - April 4 :

Canada agrees to acquire the Canadian section of the Alaska Highway, including telephone systems, buildings and other assets, for $108 million (1,221 miles at $88,000 a mile); 2,450-kilometre highway originally cost US$140 million to build, as a wartime supply route in case of Japanese invasion of North America.

Our thoughts ? ' What a Deal from a financial perspective! ' Ultimately of course there was a supply route invasion of Canada but it consisted mainly of LCD screens .... Stan Prokop



Conducting Lease Transactions in Canada – Bridging the Asset Gap



Information on asset lease financing in Canada . Capital and operating financial solutions provide the bridging you need for short term and long term fixed asset finance needs .



Scientifically proven? It's defined as a ' body of techniques’ for acquiring new knowledge. Unless we're missing something an asset lease is a trusted financial solution, bridging your operating capital needs to your long term financing solutions.

Whether it’s an operating lease versus a capital lease your company still benefits from the appropriate combination of use and to a certain degree, ownership.

So why does a lease finance solution allow you to reduce the consumption of capital. Simply speaking you can direct funds required to buy assets towards more important things, such as growing your business, expanding your products and services, etc.

When you choose between an operating lease ( using ) versus a capital lease ( owning ) it comes down to two basic criteria for final approval - the value and quality of the asset , as well as of course your firm's general credit worthiness.

The great news for Canadian business owners and financial managers is that leasing companies and solutions abound! They are provided by bank subsidiaries, independent commercial finance firms, and captive finance organizations of larger manufacturers. (In general you can’t beat vendor/captive financing for rates, terms and structures - simply because the finance arm is incented to approve and finance your asset based on the sales focus of the mfr itself).

Depending on what industry you are in you might well find that certain lease firms and solutions are more appropriate than others. Technology, computer, software, and telecom type assets lend themselves perfectly to be financed via firms with that special tech experience. More often than not you will, or in fact should, consider an operating lease for these types of assets.

What then are the key questions or issues that you should address when considering an asset lease, or utilizing this financing tool as a bridging solution... for example a sale leaseback ?

The key considerations are your expected term under which you believe you will use the asset. (3 and 5 year terms are most typical - however 2-7 year terms are available depending on asset type).

Capital or operating leases work best when they are part of an overall strategy. Your company will derive maximum benefits when you consider several issues around your asset or bridging needs - they include tax implications, how you will account for your lease, your future needs for the type of equipment you are acquiring, etc.

The Sale leaseback scenario is a great bridging strategy for financial solutions. It takes your current investment in assets and monetizes them, giving you critically needed capital.

Can leasing ever be a poor choice? Perhaps, but certainly not often. The weight of evidence, scientific or otherwise! suggests that this financing tool gives you maximum leverage in asset lease finance. If you're looking for more information and expert advice on lease concepts speak to a trusted, credible and experienced Canadian business financing advisor.







Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/asset_lease_operating_capital_financial_bridging.html

The Best Tools and Resources for Equipment Finance and Asset Lease Success - A Canadian Leasing Equipment How To !

It's your call, but if your firm has ever experienced a challenged in purchasing an equipment asset it’s about time you understood the benefits and flexibility of equipment financing via a leasing strategy.

The reality is that for most Canadian firms not all benefits attached to leasing equipment will necessarily make sense for you, but your ability to capitalize and maximize on those benefits that do will save you potentially thousands of dollars.

Today’s business world is all about competition and your ability to acquire an asset lease allows you to win the battle against deprecation and obsolescence. Quite frankly though many firms actually acquire used equipment in a variety of asset categories and this part of equipment finance in Canada is a booming one. The recent 2008-2009 recession left a glut of assets in many industries such as printing, construction, etc.

When it comes to technology financing though new is probably better, and that’s where lease financing shines. When you consider the relatively short time span it takes to arrange such a lease it often becomes a true advantage over a loan or bank term loan scenario .

Clients often ask what the ' entry points ' are to leasing in Canada. Frankly assets from three thousand to the millions are leased everyday in Canada - the bottom line is that equipment finance doesn’t discriminate against size. Stats available in the U.S. and Canada suggest that over 80% of firm lease equipment at one time or another.

Is there one constant driver in the search for great asset lease solutions? We think that more often or not it’s limited capital. Clients seem to feel that the most efficient use of their working capital and cash flow is the ' driver ' for their search for leasing equipment options. And as we said, that goes from hi tech, to low tech, whether you are financing newest computer and software technology, or refurbishing plant and equipment or transportation ' rolling stock' type assets.

As a Canadian business owner your preference is for choices. Asset lease transactions provide you with those! Focusing on either the type of lease you are acquiring, the need for a specialized term (leases generally are available for terms of 24 months to 7 years - depending on the asset and your firms overall credit quality.

Many smaller and medium sized firms don't take advantage of operating leases when considering the equipment finance option. This strategy can lower your payments, perfectly match the use and term of the equipment to your needs, and create balance sheet and accounting enhancements that will allow you to acquire the latest technology without taking on long term debt.

And don’t forget our friend ' Bundling ‘. Do you know him? Most business owners don’t realize that a lot of soft costs around an asset lease transaction don’t need to be paid out in hard cash. They can be in effect ' bundled ' into a transaction - typically these items include maintenance, warranty, installation, delivery, training, etc. That’s true flexibility.

If you want to be on the cutting edge of asset acquisition in today’s competitive environment then speak to a trusted, credible and experienced Canadian business financing and leasing advisor who can ensure a structure and approval that makes sense can be completed in a timely manner to your firms advantage.



Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.parkavenuefinancial.com/equipment_finance_leasing_equipment_asset_lease.html