How to cope with leases for goods?
More and more products are offered on the basis of a rental contract rather than a simple purchase. Coffee machines, water dispensers, work clothing and fire extinguishers are just a few examples. Typically, these contracts are a combination of equipment, consumables and sometimes a maintenance contract as well. They seem quite interesting in the short term, because you don't have to make an investment yourself, and you know what it will cost you every month. In other words, no risk. But beware, because in the long run they can be (very) expensive.
There are three pitfalls in lease contracts for goods
1. Annual indexations
The supplier reserves the right to adjust prices annually in line with its own increased costs. These annual indexations or price adjustments ensure that you may have a good price now, but will pay too much in a few years' time.
2. Tacit renewals
If you have the contract tacitly extended after the initial term, you will pay twice for the investment. Contracts running for five years with a tacit renewal of another five years are no exception. The monthly amount you pay, contains a significant component for the investment in the device itself, while after the initial period the device is depreciated for the supplier.
3. Consumables are often included
If you are tied to that one supplier because the contract stipulates it, you will not be able to explore what the competition has to offer, nor benefit from falling market prices.
So how do you make sure leasing office supplies remains a good idea?
1. Negotiate a fixed price
There is no reason why the rental component should be indexed. At least limit the price adjustment to an official index, such as the health index. Remember, before signing the contract, it is usually easy to obtain concessions. However, it becomes a lot more difficult after signing the contract.
2. Avoid tacit extensions
Always renegotiate the price at the end of the initial term. Why pay twice the investment? If you use a contract management solution such as Contractify, you will not suffer from unwanted tacit renewals any longer.
3. Do not simply accept to purchase consumables from the same supplier
If this is not possible, have a clause included in the contract stating that the consumables must be priced in line with the market.
When you put these tips into practice, you will be able to enjoy the advantages of a lease without being confronted with the disadvantages.
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