At Gibbons Mannington & Phipps we can provide businesses with advice on a wide range of financial issues. Here are some tips on tracking leases…
Many businesses have inadequate systems for tracking their equipment leases, and often fail to note maturity and renewal dates.
Leases are not cheap - especially if you are responsible for maintaining the equipment and/or paying for the insurance cover on it - so it pays to monitor them carefully.
It is not unknown for leased equipment to be returned on the expiry date without the accounts department being notified, and for payments to continue for weeks, months, and even years without anyone noticing.
A bank that eventually discovered it had paid millions in excess lease payments and associated costs reviewed all their current leases, noting the critical dates and terms of the agreements, and then developed the following tracking system.
Whenever a lease agreement was entered into, the following information was recorded and passed to everyone concerned:
- When must the equipment be returned without an automatic renewal of the lease?
- When can the equipment be purchased from the lessor?
- When do payments begin to decrease?
- Does the insurance cover all leased equipment - such as equipment that is no longer on the property?
We recommend that, if you have not already done so, you set up a similar tracking system.
If you are looking for professional assistance from a team of accountants and business advisers, contact Gibbons Mannington & Phipps.