Robert Hertzberg, CFO Magazine
December 1, 2008

Regarding your article, "Month In, Month Out"

Over all, I'd like to state that I'm supportive of what your article does to advise companies to consider leasing their technology and office equipment. Especially in these times, where cash flow is tight or where preserving cash is a key strategy. I do want to point out a couple things that didn't come off quite right in your article.

First, IBM nor HP are considered independent lessors by the ELFA. They are considered captive or vendor finance lessors. Though this has no impact on your article, I thought I'd mention it.

Next, in your example of leasing $1 million worth of servers, you mention the lessee would pay slightly more than if they had purchased it. This is simply not accurate. Using a modestly competitive lease rate for a 36 month term, the sum of the lessee's 36 payments should total much less than the actual purchase price of the equipment. Surprisingly you neglected to factor any time value of money into your evaluation. The lessee would benefit greatly by not having to issue a payment in full, up front; but by making monthly or quarterly payments to the lessor instead. When considering the time value of money, the discount from leasing the equipment is even greater.

Considering this correction to your pricing example, along with the accounting benefit and the escalating cost of disposal that you mentioned, leasing makes more sense than ever.

Posted by Greg Campbell | Feb 2, 2009 10:53 AM ET