If you lease equipment of any kind in your business, you know how important it is for the lease to be fair and affordable.

You don’t need new equipment financing to stress company cash flow. Financial surprises are preventable and unwelcome. New headaches are unnecessary.

You call the leasing company or your banker and hope they put together a leasing contract that protects your interests. Negotiation time draws near.

How do you really know if the lease is fair to both parties? How do you prepare for the negotiation so the final lease is a win-win for everyone?

Before the Negotiation Begins

1. Understand how the leasing company thinks and what is important to it. The lease contract negotiation is much more than a single focus issue of the monthly payment. The negotiation must include the maintenance contract, equipment purchase price and future contract price increases.

2. Know how leasing companies define critical contract terms. Because the lease negotiation is not a daily occurrence, most financial professionals cannot translate “lease-speak.” In some ways it is a foreign language. You may need a “translator.” 

3. Determine your non-negotiable issues. Write down your bottom line before the negotiation begins. Have another colleague hold you accountable.

4. Do your homework! Research the party with whom you will be negotiating. Use social networking tools such as LinkedIn and Facebook. Check out the leasing company or equipment dealer’s blogs and user online chat groups. Call your peer group members and ask for their opinions and experiences.
 

During the Negotiation

1. Ask for more than you need or expect to receive. Aim high. Why not? If you start low, you have nowhere to go.

2. Understand that you have to give to get. Make concessions slowly.

3. In a lease negotiation, the lessee usually starts the negotiation ball rolling. Write down all your lease contract changes, concerns and questions.  

4. Present all contract changes at one time. Never send one change followed by another change the next day. That doesn’t work in equipment leasing. One compromise affects another; therefore, all changes need to be considered together as they relate to the entire document.

Counter-Offer and Documentation

1. Use the red line editing function in the electronic document. This provides a historical perspective. Change the file name to avoid confusion in tracking the most current contract version.

2. Check all final draft documents. It is amazing how sometimes-negotiated changes “disappear” in the final draft. When not all negotiated modifications are included, the customer is the one hurt the most.

Be prepared. Follow the steps and commit the time necessary for proper evaluation and negotiation.

The result will be:

1. A lease agreement that achieves your company financial and cash flow goals.
2. A lease that is “gotcha” free.
3. Equipment that fits your needs, is technologically up-to-date and a pricing plan that fits your company budget.