As competition intensifies and rental companies seek more agile models, leasing offers both customers and the business greater financial flexibility and more effective inventory management. In his latest blog post, Fame Rental CEO Joe Lewis discusses this critical shift in the rental industry, as well as the rising importance of equipment leasing over traditional sales or outright purchases.

Lewis points out that the opportunities involved in equipment leasing also create a new level of complexity for rental businesses, particularly lease accounting standards under ASC 842 and FASB regulations that require more rigorous financial reporting.

“These rules are somewhat complicated and require accurate bookkeeping, which is why many smaller businesses shy away from these arrangements. Further complicating matters, each lease type has different rules, and each agreement must properly conform to these rules,” he writes.

The blog post also explores three different types of lease categories:

1. Operating Leases – You do not own the equipment; you are essentially renting it with predetermined rules for acquiring it at the end of the lease if you choose
2. Finance Leases – You own the equipment, but pay principal and interest over time rather than all cash up front
3. Fair Market Value (FMV) Leases – Similar to Financing but with different accounting, including tracking Right-of-Use (ROU) Assets

“There are pros and cons to each type, so you must be careful to choose the right type to maximize the return,” Lewis notes. “But the complexity with leases doesn’t have to be a deterrent. Properly implemented, there is additional income to be made, and likely more ‘sales’, by providing leasing options to your customers. There may be a better use of cash when leasing some of your equipment from a lessor. The financial benefits are there, but you will need a system to help manage them.”

Fame Rental’s web-based software solutions support both outbound leasing (to customers) and inbound leasing (from vendors), while automating lease accounting throughout the entire transaction lifecycle. As an asset-centric ERP, it tracks all financial and operational metrics down to the individual asset. This helps ensure consistency in reporting and accurate Return on Assets (ROA) calculations.

About Fame Rental

Fame Rental improves businesses and the lives of their employees and customers. Fame does this because it cares more deeply, listens more intently, and acts more methodically than anyone in the rental industry would ever expect from a software company.

Based in Westport, CT, Fame Rental offers innovative web-based software solutions that help rental businesses manage rentals, sales, service, retail, leases, manufacturing, maintenance, inventory, parts, purchasing, accounting, and asset financing — all in one, fully integrated system. The FameAir™ web application provides real-time information to anyone, anywhere, at any time.

Fame takes the time to understand its customers’ needs, goals, dreams, and desires. It then configures management software that helps rental business owners sleep well at night and outsmart their competition by day. It also offers technical support that delivers solutions within hours or days, not weeks or months. Contact us at sales@famerental.com to schedule a demo.