HOW TO SAVE 6% - 12% ON YOUR LEASE PROGRAM NOV 1, 2018

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1 HOW TO SAVE 6% - 12% ON YOUR LEASE PROGRAM NOV 1, 2018 THE LEADER IN ENTERPRISE LEASE ACCOUNTING SOFTWARE Ingemar Lanevi VP Finance and Capital Markets Bob Solomon Former Ariba Executive and Sourcing Consultant

2 Introduction Host Ken Chow VP Product Marketing Presenter Ingemar Lanevi VP Finance & Capital Markets and former Fortune 500 VP and Corporate Treasurer Marketplace Expert Bob Solomon - CEO, Software Platform Consulting, Inc. and former VP at Ariba Page 2

3 Background Global accounting rules drove electronic lease management. Central data repositories and rules-based engines. Detailed information on every lease and related asset. Automatically track, analyze, and manage leases at a granular level. Using this technology, there s an opportunity to achieve 6%-12% lease cost reduction across portfolios. Page 3

4 The Problem Traditional Bundled Approach Asset Lease An RFP process is time consuming and costly. Comparing bids is extremely difficult. Adding new lessor relationships adds delay. New agreements require legal resources. Equipment Supplier & Captive Finance Org. Page 4

5 The Result Traditional Bundled Approach Asset Lease Equipment supplier & captive finance org. Procurement teams treat leasing as a transaction - typically handled by treasury. The leasing discussion is often an after thought. Many firms avoid competitive bidding. If a lease is essentially a commodity in today s market, why aren t we treating it that way? Page 5

6 The Solution Optimized Unbundled Approach Asset Lease Separate leasing from purchase price. Make lessors compete for your business! Use SW to streamline the process. Competitive Marketplace for Equipment Competitive Marketplace for Leasing Leverage a standardized lease agreement: Apples-to-apples Remove switching costs Avoid Evergreen situations Page 6

7 Physical Marketplaces Are Centuries Old Page 7

8 Online Marketplaces Have Proliferated B2C C2C B2B Page 8

9 Financial Services Marketplaces Have Also Flourished B2C/C2C B2B Mortgages Peer to Peer Lending SMB Lending Working Capital Mktplace Merchant Lending Supply Chain Finance Student Loans When Lessors compete for your business, you win! * *Thanks, Lending Tree Page 9

10 The Keys to a Successful Marketplace Value to both sides of the market Buyers gain access to quality suppliers Suppliers inexpensively find new buyers Value leads to liquidity and adoption Suppliers participate if buyers do and vice versa A global supply base brings competition which drives buyer value A marketplace establishes trust by establishing rules and rails Only real transactions, only genuine participants Standardized structures, definitions, and nomenclatures Value-Added services Help with participation on the marketplace Services associated with the logistics of transactions Page 10

11 The LeaseAccelerator Marketplace Traditional Bundled Approach Optimized Unbundled Approach LeaseAccelerator Marketplace Banks Competitive Bidding Process Captives Independents Page 11

12 Savings Time: Manual Bidding Process days Automated Bidding Process 5 10 days Money (assumed 7% typical savings): Portfolio Size Typical Savings $100 M $7M/yr. $500 M $35M/yr. Page 12

13 Savings Typical Client with $500M Leasing Portfolio BEFORE AFTER RFP Generation Days or Weeks Hours Bid Analysis Weeks Minutes Contract Negotiation Weeks Minimal Savings $0 $35M/year* * assuming 7% reduction in LRF Page 13

14 Proof Point - Material Handling Equipment A Fortune 1000 client added Material Handling Equipment and leverages leasing to save on cash flow. Using LeaseAccelerator and The GLN they went to market and obtained aggressive rates for four different material handling products, resulting in a great final outcome. The client elected to award to the runner up in order to take advantage of LeaseAccelerator s standard lease documents, PureDocs to speed up the close of the transaction. Amount Financed: $229,278 Term/Structure: Proposals Received: 6 48 Month FMV Operating Lease Max Average Min Award Total Savings Percent Savings Annual Payments, Initial Term Total Payments, Initial Term Present Value, Initial Term $59,842 $53,138 $46,594 $47,031 $6, % $239,366 $212,551 $186,376 $188,125 $24, % 100.7% 89.8% 80.1% 80.1% Savings = Average Bid - Award Bid Page 14

15 Proof Point - Oracle Exadata Lab-ERP A Fortune 150 IT organization needed a leasing solution quickly to expand its Oracle ERP capacity, given a demanding implementation timetable and a $47K service credit offered if deal booked by a certain date. Using LeaseAccelerator and The GLN they went to market quickly and obtained aggressive rates on an accelerated timetable, resulting in a great final outcome for the client. Amount Financed: $1,865,197 Term/Structure: Proposals Received: 8 36 Month FMV Operating Lease Max Average Min Award Total Savings Percent Savings Annual Payments, Initial Term Total Payments, Initial Term Present Value, Initial Term $649,424 $579,464 $516,585 $516,585 $62, % $1,948,273 $1,738,392 $1,549,755 $1,549,755 $188, % 100.7% 89.8% 80.1% 80.1% Savings = Average Bid - Award Bid Page 15

16 Proof Point - Olympus Endoscopy Olympus endoscopy equipment financing secured with a new lessor from the Global Lessor Network, expanding the hospital s lessor base while realizing significant savings from the competitive financing process. Amount Financed: $2,343,615 Term/Structure: Proposals Received: Month Operating Lease FMV Buyout/Renewal Caps Max Average Min Award Total Savings Percent Savings Annual Payments, Initial Term Total Payments, Initial Term Present Value, Initial Term $634,356 $587,376 $510,996 $510,996 $76, % $2,325,972 $2,153,712 $1,873,652 $1,873,652 $280, % 87.8% 81.3% 70.7% 70.7% Savings = Average Bid - Award Bid Page 16

17 LA Value Proposition: Enterprise Lease Accounting SOURCING MANAGEMENT ACCOUNTING Chief Procurement Officer (CPO) & Treasurer 6-12% Savings Return on Investment Corporate Controller, Treasurer, & CPO 10-12% Savings Process Transformation Corporate Controller Avoid Restatement Sustainable Compliance COMPLIANCE SAVINGS Page 17

18 Next Steps for more information to set up an in-depth discussion specific to your situation Page 18

19 THANK YOU QUESTIONS? LeaseAccelerator LeaseAccelerator