This document discusses different types of vehicle leasing options and considers whether leasing is truly the simplest way to acquire vehicle needs. It outlines various lease types, including operating, finance, and novated leases. The key reasons given for leasing include preserving cashflow and balance sheet flexibility, controlling costs, leveraging buying power, and outsourcing fleet management responsibilities. Both advantages like known monthly costs and outsourcing, and disadvantages like extra fees and early termination penalties are summarized. The document concludes that while leasing can provide convenience, an organization still cannot outsource its occupational health and safety responsibilities and managing multiple vehicle ownership can be complex.

1. What type of lease is right
for your organisation?
Mace Hartley, General Manager
Smartfleet Management

2. Introduction
Leasing is often said to be the simplest way to acquire
your transport needs; is this TRUE?

3. Contents
• Types of leases
• Reasons for leasing
• Cost components of an operating lease
• Advantages of leasing
• Disadvantages of leasing
• Summary

4. Types of Leases
Operating
Lease
Fully
Maintained
Partially
Maintained
Closed
Ended
Open
Ended
Finance
Lease
Novated
Lease

5. Reasons for Leasing
Cashflow
Balance
Sheet
Cost
Control
Buying
Power
Knowledge
& Resources
Hassle Free
Risk
Reduction
OH&S
Vehicle
Purpose

6. Reasons for Leasing
Proposed Accounting Standards will impact the
balance sheet of companies that use operating
leases.
• On the table since 2006
• Joint project between IASB & FASB
• Most likely exclude leases <12 months
• Will impact debt ratio’s, equity ratio’s and other
financial covenants
• Will increase compliance and governance costs
• Still in progress and unlikely to be implemented
prior to 1st July 2016
Balance
Sheet

7. Reasons for Leasing
• Often fleet management becomes the
responsibility of procurement
• Great at purchasing however limited resources
and experience with management of:
• Registration & Infringements
• Repairs & maintenance
• Fuel & E-Tag
• Lack of systems to centralise and control
expenses
• Single person dependency
• Buying power of the collective
Knowledge
& Resources
Cost
Control
Buying
Power

8. Reasons for Leasing
Vehicle Purpose:-
• Operating leases normally used for tool of trade
vehicles where majority of usage is business use
• Novated leases used where there is little or no
business usage
• Novated leases provide staff with benefits and
choice of vehicle
• Novated leases generally produce expense
saving in payroll tax
Vehicle
Purpose

9. Reasons for Leasing
Risk Reduction:-
• Uncontrolled costs are capped by choosing
either a fully or partially maintained operating
lease
• The risk of losing fleet expertise due to staff
movement is reduced by outsourcing your fleet
management
• Engaging a fleet management company –
registration renewal’s
• Any disposal cost and potential loss managed
by the operating lease company
Risk
Reduction

10. Reasons for Leasing
Occupational Health & Safety:-
• “The operating lease company owns the
vehicles so they have the OH&S responsibility
for regularly servicing it”
• “We allow our employees to salary package
their vehicle so they have the OH&S
responsibility for regularly servicing it”
OH&S
• An organisation cannot transfer or outsource its
responsibility for providing a safe working
environment for its employees

11. Cost Components of Operating Lease
Lease
Repayments
Residual
Value
Vehicle
Cost
Special
Equipment
Excess Fair,
Wear & Tear
Costs
Running
Costs
Interest
Rates
Excess
Kilometres

12. Excess Fair Wear & Tear
• How do your drivers treat your vehicles?

13. Advantages of Leasing
• No major capital outlay
• Quoting, ordering and disposal outsourced
• Known monthly costs
• Access to large buying power
• One bill for all vehicles
• Leverage knowledge of leasing company
• Management of servicing, registration and potentially insurance
outsourced

14. Disadvantages of Leasing
• How do you manage pool vehicles?
• How do you manage your non-leased vehicles?
• Do you know if vehicles are being serviced?
• Who is managing your infringements?
• Limited access to reporting and what about non-leased vehicles
• Extra fees if excess kilometres travelled
• Extra repair cost for excess fair wear & tear
• Early termination fees if your business needs change (interest and
movement in residual risk)

15. Summary
• Convenience equals cost!
• You can’t outsource your OH&S responsibilities!
• Multiple vehicle ownership makes managing your fleet
difficult!
• Refer AfMA reference library for assistance with
suggested policies

16. What Do You Think?
Leasing is often said to be the simplest way to acquire
your transport needs; is this TRUE?

17. My View
Novated Lease
Finance Lease
Op Lease – Fully Maintained
Op Lease – Partially Maintained
Simple
Complex
ExpensiveCheapest
Owned Fleet

18. Survey Results
Which state do you live in?
Which sector best describes your company?
Which title best describes your role?
How many vehicles are in your fleet?
What best describes how you fund your vehicles?

19. Survey Results
Which state do you live in?

20. Survey Results
Which sector best describes your company?

21. Survey Results
Which title best describes your role?
Response Chart Percentage Count
CEO, CFO, COO, GM 15.4% 4
State Manager 7.7% 2
Fleet Manager 26.9% 7
Procurement Manager 7.7% 2
Fleet Coordinator 11.5% 3
Other 30.8% 8
Total Responses 26

22. Survey Results
How many vehicles are in your fleet?

23. Survey Results
What best describes how you fund your vehicles?
Response Chart Percentage Count
Mostly Operating Lease with
some Owned Vehicles
32.0% 8
Mostly Operating Lease with
some Financed & Owned
Vehicles
4.0% 1
Mostly Owned with some
Operating Lease Vehicles
40.0% 10
Mostly Owned with some
Operating Lease & Other
Financed Vehicles
24.0% 6
Total Responses 25

24. If you want more details, please contact:
Saki Polychronopoulos
National Sales Manager
www.smartfleetaustralia.com.au
PO Box 6738, St Kilda Road Central VIC 8008
Level 8, 11 Queens Road, Melbourne VIC 3004
saki.polychronopoulos@smartfleetaustralia.com.au
M +61 403 613 749 | D +61 3 9998 3225 | F 1300 764 522