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OPERATING LEASES
An operating lease is an asset rental agreement for an initial fixed period, based upon a “pay for use” structure over the “optimum economic life cycle” of the asset . At the “end of term” the equipment can either be returned to ISIS LG FINANCE, without any residual obligation or the flexibility is provided for other “end of term options” to be exercised.
ISIS LG FINANCE can finance the total acquisition and management costs of equipment, technology and non-core business assets that are required by a client, including “Soft Costs” such as software, training, maintenance and installation.
FEATURES OF OPERATING LEASES
- Payments are pre-determined, regular and understood. This provides Local Government with a high degree of financial certainty in respect of the total cost of the equipment, technology and non-core assets in their business and therefore enables better management of cash flows and cost environments.
- Payments are spread over the useful life of the assets involved, avoiding any large capital output.
- The risk of ownership, asset value obsolescence and cost of disposal of the equipment is borne by ISIS LG FINANCE and not the client. The normal rate of technological obsolescence and cost of asset disposal need no longer apply.
- It also conserves both working capital and existing credit facilities.
- The Operating Lease facility is structured on a quarterly basis to reduce administration throughout and at the end of term.
- End of Term flexibility is at the core of the ISIS LG FINANCE Operating Lease offering.
- ISIS LG FINANCE facilitates fast tracking to new technology to keep the asset base and capacity of Local Government current within a single Operating Lease contract environment.
- It also facilitates the acquisition of new and additional equipment, technology and non-core assets.
- Simple documentation and settlement processes facilitate supplementary transactions once an ISIS LG FINANCE “Master Rental Agreement (MRA)” is established.
- Payments are structured initially and can be restructured during contracts to reflect the situation and needs of its clients at any given time.
- Flexible ‘End of Term’ options are provided.
When would Local Government use an operating lease?
Operating Leases in the Local Government environment are ideally suited to depreciating assets that have an optimum life cycle of between 1 and 7 years. Long term assets such as land and buildings are usually more ideally suited to traditional Local Government funding sources.
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