Operating Leases Can Make a Difference on the Balance Sheet

February 11, 2011

When it comes to leasing technology in Brazil, it is clear that a finance lease is still the most widely known type of lease. But today, businesses are looking to incorporate governance and compliance with international standards and decrease the total cost of ownership (TCO). They are also looking for better efficiency in asset management and environmentally friendly equipment disposal in their lease, especially for technology. Many businesses are turning to operating leases to help with equipment lifecycle management and information security.

“With operating leases, the client has no intention of purchasing the equipment at the end of the contract and prefers to have up-to-date technology equipment to ensure the productivity and competitiveness of their business,” explains Cesar Zarate, CEO of CSI Leasing Brazil – PT.

At the end of the lease term, the customer can return the equipment to the lessor, extend the lease or purchase the assets at fair market value.

“Some companies now realize they must consider the costs associated with replacing equipment at the end of its useful life, such as data sanitization, storage, remarketing and environmental costs associated with disposal. As a rule, purchase tends to be the worst option,” said Zarate. “In the case of operating leases, the lessor is typically responsible for all of these costs,” adds the executive.

According to Zarate, the term of the operating lease fits the equipment life and not the accounting life. “Thus, it is not necessary to wait for accounting amortization of the asset before refreshing,” he emphasizes.

For these reasons, operating leases are becoming increasingly strategic within organizations to improve financial ratios such as ROA (return on assets) and reducing operating costs related to owning the asset.

CSI Leasing offers structured solutions focusing on operating leases that include consultant services in ​​IT lifecycle management. They have highly skilled professionals specializing in technology equipment leasing, as well as national and international accounting standards and corporate governance.

In Brazil, the company operates in the capital and countryside of São Paulo, Rio de Janeiro and Minas Gerais, but operates throughout the Brazilian territory.