Global Best Practice - Lease Purchase Decision
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Procurement needs to be cautious when determining the best ways to use public funds. When paying for new equipment, that means deciding whether buying or leasing will be the best use of public funds. To make a lease-purchase decision, there must be a cost/benefit analysis that considers the costs to own, the costs to lease, and the advantages and disadvantages of other relative factors. Procurement should work with finance and other stakeholders, as appropriate, to conduct a cost/benefit analysis that carefully analyzes the benefits of leasing compared to buying. This practice includes a checklist of factors to consider along with a list of contract options to consider when procurement is deciding whether to lease or buy a piece of equipment. It also includes important factors to consider such as how to choose a vendor, how to negotiate a contract, and how to manage a lease contract. Without the right controls and oversight in place, a lease contract will be ineffective. When done correctly, leasing can be the most efficient and cost-effective way to procure equipment. When done without proper consideration, though, it can be more costly and less effective to lease than purchase or lease-purchase equipment.