How is an Equipment Lease similar to an Uber?

 

Kevin F. Clune, CLFP

After some recent experiences with Uber rides while traveling, I am definitely a fan of this service. It is easy to use, reliable, and only charges you after you have been delivered to your destination. Therefore, my interest was aroused when I spotted an article titled, “The Uberization of Vendor Finance”. 

The comparisons between Uber and the Leasing Industry have now reappeared in the latest editions of Industry Publications, but with a twist. Could this mean the end of the standard Vendor Program Agreement

To provide some background, I first commented on this topic over a year ago in this column. In it, a case was made that a lease to acquire equipment is similar to using an Uber for transportation. I stated that these “tools” are alike in that both are based upon the mentality that says, “It’s a hassle to own things.” There are many advantages of financing equipment with a lease.

According to this recent comparison, however, leasing contracts are evolving to become more like an Uber transaction. Due to customer demands for “access to a broad range of required services to be available for purchase as needed”, contracts are becoming more flexible. Just as one does not pay for Uber services until needed, the costs of accessories, installation, maintenance, and consumable supplies associated with leased equipment can be billed as they are used. 

It is believed that the rise of small businesses and the integration of millennials into the workforce are driving these demands. It is estimated that these Managed Service Contracts will significantly impact total U.S. leasing volume in the next 3-5 years. 

With many Lease Finance choices, both Equipment Vendors and Leasing Customers will be more inclined to choose a funding source that can offer this flexibility to customize contracts. We at Clune take pride in our company being flexible to fit our customer's needs. Let us know if we can serve these evolving needs for your customers or your business as easily as an Uber ride. 

Kevin F. Clune, CLFP
Clune & Company LC