• Like
Financial products for entrepreneuers
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

Financial products for entrepreneuers

  • 367 views
Published

Equipment Leasing, Factoring and Cost Seg

Equipment Leasing, Factoring and Cost Seg

Published in Economy & Finance , Business
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
367
On SlideShare
0
From Embeds
0
Number of Embeds
1

Actions

Shares
Downloads
2
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Neil MorstadCapstone Equipment Finance, LLC Austin, TX RISE March 28, 2012
  • 2.  Show me the money  Equipment Leases  Loans  Current equipment  Inventory or floor planning  Purchase orders  Factoring  Cost Segmentation Benefits Expectations and cautions Best bets to find money Neil Morstad Capstone Equipment Finance 512-653-6345
  • 3.  Operating lease  Lessee makes payments to use equipment  Apartment Capital lease  Lessee make payments to own equipment  House  Very similar to loan Risk of ownership for accounting and tax purposes Neil Morstad Capstone Equipment Finance 512-653-6345
  • 4.  Conserve bank lines Avoids restrictive loan covenants Avoids compensating balances 100% financing  Software, soft costs (shipping, training) Flexibility for upgrades and add-ons Flexible payment schedules  M/Q/S/A, seasonal, stepped, skipped, uneven Neil Morstad Capstone Equipment Finance 512-653-6345
  • 5.  Expense full payment for operating lease Expense interest payment of capital lease Minimize Alternative Minimum Tax (AMT)  Depreciation preference item from capital assets Expense payment faster than depreciation Non-tax payer realize tax benefits  Non-profits, start-ups, NOL carryforwards Neil Morstad Capstone Equipment Finance 512-653-6345
  • 6.  Off balance sheet financing (with a note on f/s)  Changes due from IASB next year Match expense with revenue Better budgeting  Fixed payments for fixed term Avoid capital budget constraints  Operating lease pmt paid from operating budget  Popular at end of year when capital budget exhausted Improve ratios, ex. ROA, Debt/Equity Neil Morstad Capstone Equipment Finance 512-653-6345
  • 7.  Multiple end-of-term options  Purchase, return, renew Eliminate problems of equipment disposal Simplified documentation  Master Lease Agreement with schedules Neil Morstad Capstone Equipment Finance 512-653-6345
  • 8.  When does equipment title get transferred?  Loan – when equipment purchased by borrower  Lender files lien as secured party to perfect interest onUCC1 financing statement  Lease – After last payment is made, residual is paid, and any other outstanding charges are paid  Capital lease – Lessor files lien with UCC1  Operating lease – Lessor files “information only” UCC1 Neil Morstad Capstone Equipment Finance 512-653-6345
  • 9.  Too much money tied up in non-cash liquid assets  Current equipment (also sale-leaseback)  Inventory Depletion of other sources of cash and debt Neil Morstad Capstone Equipment Finance 512-653-6345
  • 10.  Uncompleted work orders Acquiring additional inventory Ship product from manufacturer to suppliers Neil Morstad Capstone Equipment Finance 512-653-6345
  • 11.  Lender evaluates accounts receivables/Aging report Lender determines risk then advances funds  Better AR receives larger advance (70 – 95%) Your company still invoices for payments Customers send payments to lockbox Lender responsible for collecting receivables  If more payments received than expected, additional amount paid by lender to seller Fee kept by lender from collection receipts Neil Morstad Capstone Equipment Finance 512-653-6345
  • 12.  Costs  Service Fee  Giving up control of some/all collections function  Collection amount still risk for business owner Benefits  Improve amount and consistency of current cash flow  Eliminate/Reduce costs of collections department  Manage rapid growth of business  Take advantage of supplier discounts  Extend credit to customers for large orders Neil Morstad Capstone Equipment Finance 512-653-6345
  • 13.  Personal guarantee Additional collateral  Security deposit, title vehicles, 2nd residence Corporate/Personal tax returns Corporate/Personal financial statements Previous bankruptcy, tax lien, bad credit  Not deal killers  Collateral vs. credit lenders Neil Morstad Capstone Equipment Finance 512-653-6345
  • 14.  Fees  Upfront, during term, and end of term Advance Payments  Advance vs. Arrears – Ex: approx 100 bps rate difference  One vs. First & Last – Ex: approx 100 bps rate difference Residual/Buy-out amount Documentation  Commencement date – Ex: approx 600 bps rate difference  Exercise windows  Evergreen – Automatic renewal  Wintergreen – No renewal unless requested by lessee Neil Morstad Capstone Equipment Finance 512-653-6345
  • 15.  National/Regional Banks and Leasing Companies  Large accounts  Medium /Small accounts with great credit Local Banks  Medium/Small companies with great – good credit  Start-ups Local Leasing Brokers/Consultants  Medium/Small companies with good – challenged credits  Start-ups Neil Morstad Capstone Equipment Finance 512-653-6345
  • 16.  Access to best and broadest financial solutions  Especially in a diverse and rapidly shifting marketplace Help tailor plan for specific needs  (Cash flow, accounting, tax) Consultant to compare options/answer all questions Provide financial objectivity Assistance from credit application to end of term Fees usually based on or capped by equipment cost Neil Morstad Capstone Equipment Finance 512-653-6345
  • 17.  Owners of commercial real estate Both real and personal property depreciated at longer real property life Separate short-term personal property from long-term real property Reduce current tax payments – Increase cash flow Contact your CPA or Cost Seg specialist firm Neil Morstad Capstone Equipment Finance 512-653-6345
  • 18.  Showed you the money  Equipment Leases  Loans  Current equipment  Inventory  Purchase orders  Factoring  Cost Segmentation Benefits Expectations and cautions Best bets to find money Neil Morstad Capstone Equipment Finance 512-653-6345
  • 19. Neil MorstadCapstone Equipment Finance, LLC neil.morstad@capstoneEF.com 512-653-6345