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Financing logistics equipment: have you thought about leasing?

Wheat Harvest --- Image by © Robert Della Piana/CORBIS

Purchasing logistics equipment can prove to be quite expensive for agriculture, construction, transport or material handling professionals. When making a financial decision, it is important to explore other, possibly more advantageous options out there apart from a traditional loan.

Financing logistics equipment: loan is not the only option

For acquiring efficient logistics equipment in good condition, different financing options are available to you and your customers:

  • Lease with option to purchase or finance leasing: the professional pays a monthly rental fee that allows them to use the equipment for a given period. At the end of the lease term, the client can either purchase the equipment by settling the remaining amount stated in the contract or return it.
  • Leasing with or without services: at the end of the contract, the client can return the equipment, extend the lease, or sign a new contract for some other equipment. The contract may include additional services such as maintenance. Leasing solutions (with or without an option to purchase) enable companies to optimise their cash flow by spreading out the costs over several years.

Furthermore, a simple contract can be concluded directly with the dealer, within minutes.

Leasing logistics equipment: guaranteed flexibility

Leasing options are very flexible compared to a loan.

It allows professionals to regularly renew their machines, and therefore maintain access to material that is adapted to the latest technological advances. In case of farmers, for example, tractors have seen significant technological progress in recent years in terms of comfort, safety and driving assistance. New models include GPS and on-board cameras (so that the drivers can see behind or sideways). Thanks to the autopilot systems, farmers don’t have to hold the steering wheel anymore and can concentrate on controlling the spreading, sowing or spraying systems. In the coming years, some manufacturers even intend to sell self-driving tractors.

Leasing also proves to be a very smart solution for growing businesses. Farmers will need to replace tractors and logistic gear as the size of their farm increases, so as to meet changing needs of production.

Leasing is a financing solution particularly well-adapted to the needs of businesses that provide agricultural services. Since such businesses do not hold long-term contracts, leasing ensures better management of their agricultural machinery.

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Leasing supports energy transition

By facilitating access to the latest equipment, leasing offers companies the opportunity to benefit from more efficient, but also more ecological equipment. New products are increasingly respectful of the environment, particularly due to legislative pressure. For example: since January 1st, 2019, a European regulation requires off-road vehicles (such as agricultural tractors) exceeding a certain engine power to meet a new anti-pollution standard (the “Stage V” standard).

The use of “greener” equipment sometimes becomes necessary to carry out essential business operations. For example, logistics companies need to respect the regulations put in place by city councils, limiting or even prohibiting access to the city centre for polluting trucks.

Finally, leasing is more environment-friendly than purchasing via loan, as equipment returned at the end of the contract could be offered to other users for a second use.

Benefitting from logistics equipment related services

Leasing may also come with added services adapted to your equipment’s particular use. This may include insurance, warranty, maintenance, and so on.

These services are included in the rental fee. So, you don’t have to worry about taking out insurance with another company, nor about maintenance: everything is taken care of under one single contract.

This type of advantage is crucial, especially in the agricultural field: if a machine is not operational at the right moment, losses can be substantial. For example, a forage harvester must be used at a particular moisture level, and therefore must be in perfect working condition when the need arises. Similarly, in the construction sector, the failure of a single machine could interrupt the work on the entire construction site and lead to significant delays.

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Leasing is becoming more and more popular with professionals

Leasing fits perfectly into the increasingly popular “product-as-a-service” model, which encourages the use of equipment rather than owning it.

Young people, especially young farmers, are more inclined to pay for the actual use of a good rather than its ownership, owing to both a generational tendency and ecological reasons. “The product-as-a-service and the circular economies are at the heart of our business. We offer companies financing solutions that allow them to grow commercially in a responsible and sustainable way”, states Charlotte Dennery, Chief Executive Officer.

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