How do you use leasing in your company?
🔹Only for specific asset categories (e.g. vehicles), or
🔹on an ad-hoc basis when a larger investment comes up (regardless of the asset), or
🔹strategically, i.e. actively identifying the assets most suitable for leasing?
In practice, leasing is often regarded as a straightforward financing instrument, frequently used outside of treasury — for example, by the procurement department.
The true strategic advantages, such as
🔹the ability to manage the balance sheet, P&L, and covenants,
🔹spreading the maturities of financing instruments,
🔹diversifying funding sources, and
🔹relieving working capital lines at core banks,
are often overlooked and therefore left untapped.
Leasing and hire purchase deliver their greatest benefits to the financier when the asset
a) has a well-assessable secondary market or residual value, or
b) is absolutely essential to operations.
As a customer, you can leverage these considerations from the financier's perspective to your own advantage!
🔹Risk reduction through asset security: The leasing company calculates the asset's value trajectory and determines the "unsecured risk" not covered by the collateral — meaning the asset is factored in as a risk-mitigating element (since leasing, unlike loans, legally permits this).
🔹Faster risk reduction: As ongoing repayment instalments are made, the financier's exposure decreases significantly faster than the asset's market value (reducing the unsecured risk), and after a certain period, the financier is fully secured by the asset's value alone.
Use these considerations strategically in your treasury!
The stronger asset-based collateral allows lessors to offer significantly longer terms compared to bank loans!
👉Finance long-lived, value-retaining assets with long maturities through leasing (the golden rule) — other assets without a genuine secondary market can just as easily be financed via loans.
Ideally, working capital lines can then be used for their actual purpose — financing working capital — since their "rigid utilisation" has been financed elsewhere through leasing. Good for your credit rating!
👉This also allows you to positively influence your equity ratio and leverage… which is precisely why leasing is a strategic financing instrument!
👉 Do you apply these considerations when choosing your financing instrument?
Let's talk!
How do you use leasing in your company?
