How to do a "Buy versus Lease Analysis"

Today, the most common way to manage your fleet still is Operational Lease. Although it is a well-known fleet solution in the market, for some companies owning a fleet outright still is the favorable choice. But, as a fleet manager, procurement leader, or finance manager, how do you know when it is better to switch to Operational Lease?

Running an efficient fleet demands significant time, hard work, and many transactions a year. Outsourcing that job to a leasing company might bring you the financial benefits for your company you are looking for.

Weighing the financial benefits

When choosing for leasing, money usually spent on procuring vehicles can now be saved or invested back into the business. Regarding that money is getting more expensive, it is best invested into that what delivers ROE. Most likely that will be your own core business.

Leasing also offers a better cash flow because lease products can be chosen in a fixed format and provide a steady cost pattern in the consolidated monthly invoicing. Where self-owned fleets have a traditional peak/low in the cash flow throughout the year, Leasing helps to stabilize budgets and will project cash flow much better for months and usually even in the years to come.

Besides the investment decision, there is also the financial aspect of internal resources that are allocated to managing the Self-owned fleet. As said, there are hundreds or sometimes thousands of transactions a year. Translate that into hours and salary, and there you have your indirect fleet costs, which can add up to a considerable sum.

How to do a Buy versus Lease analysis

The Operational Lease product - with its two components of Financing and Fleet management services - should be compared with their counterparts in the Self-owned fleet situation. For the Financing part, as mentioned earlier, this is easy to do. But oftentimes the indirect costs of the Fleet Management services are not taken fully into consideration during this comparison.

Business Lease works with a tool that accurately maps all cost savings for you on a process level, all the way down to the minutes per year on a task level. The result of the analysis shows a comparison between your current situation (Buy) versus a possible future situation (Lease). This includes your direct and indirect costs.

Download the leaflet or, contact us today to learn more about how we can help you achieve your company goals.

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