IT-leasing: it’s worth it
You can benefit from our longtime experience, in-depth industry knowledge and individualized solutions: Miller Leasing will let you experience all the benefits and specifics pertaining to Basel II and US-GAAP/IFRS regulations.
- The IT industry evolves at an ever faster pace, offering more and more possibilities to optimize our business processes. Short contractual periods allow you to remain flexible and give you the chance to react to new developments. Various replacement models simplify budgetary planning and constantly provide you access to the latest technology.
- Fixed installments form the basis for clear planning and budgetary criteria. Enjoy the „pay as you earn“-effect.
- Leasing- and rent installments are generally posted off-balance. They appear in your company’s profit and loss statements as a business expense, irrespective of amortizations regulations– this will, under certain circumstances, also apply to companies that balance according to IFRS or US-GAAP regulations.
- Leasing- and rent contracts with Miller Leasing preserve your credit limits with conventional financing sources. This improved cash flow can be put to good use in improving your core business.
- You prefer to arrange financing directly through your supplier or the manufacturer? Miller Leasing will gladly make arrangements for this.
- You prefer rental over leasing? Miller Leasing’s 30-year experience in this field is at your service!
Are you still in doubt about the many advantages leasing may offer you and your company? Please contact us. We will gladly discuss all available options with you!
Leasing through MLM and Basel II:
As the lessor, MLM becomes the economic owner of the leasing property and accounts for it on its balance sheet, therefore avoiding a balance sheet extension for the lessee. This will positively influence your equity ratio, potentially improving your credit rating among banks. This will provide access to more favorable financing conditions.
Since 2007 new lending process requirements are in force, enforcing a closer correlation between the equity requirements of financial institutions and the loan beneficiary’s credit rating (Basel II). Previous regulations merely required financial institutions to hold a fixed 8% of the loan amount in escrow. New regulations tie this percentage to the loan beneficiary’s credit rating. The loan’s base rate is based on the individual credit risk, determined by either a credit agency or the loan issuing bank. Based on the specific industry and/or company, this may cause financing to become more difficult and/or more expensive.
Off-balance financing, independent of US-GAAP / IFRS:
In case your company prepares its balance sheet according to US-GAAP or IFRS, separate regulations regarding to the off-balance presentation of leasing contracts apply:
- In this case leasing contracts are divided into operating lease (US-GAAP and IFRS) and capital lease (US-GAAP), respectively finance lease (IFRS). You can find out more about FAS 13 (US-GAAP) at www.fasb.org. More information regarding IAS 17 (IFRS) can be found at www.iasb.org (usage of this site requires a fee).
- These types of contract differ in the way the contract is activated and in the way the leasing property is depreciated, therefore having a direct effect on the company’s balance sheet.
- Under an operating lease, the leasing property is activated and depreciated on the side of the lessor. Under capital lease, respectively under a finance lease this takes place on the side of the lessee.
- Under an operating lease monthly installments are posted directly to the profit and loss statement (off-balance company expenses).