Making Use of KPIs for Managing a Leasing Company
Leasing refers to the contractual transfer of ownership of an asset or service from one party to another. The beneficiary is called the "lessee" and the original owner is the "lessor" and organizational groups, which carry out this task on commercial basis are the referred as leasing companies. Though the definition of their work may seem simplistic but in reality the managing the functions of a leasing company is a complex activity that necessitates the need to recognise several fluid variables. To start with a leasing company either works directly with clients to provide them with options regarding the leasing of assets or with vendors to help them find suitable customers. The proceedings in this concept are highly governed by the norms and guidelines issued by the concerned authority. Consequently, the transactions followed in a Leasing Company are enormously complicated.
There are several types of such dealings which result in an entangled mesh of "Laws and Contracts". For instance, in case of "fixed period" lease, the term of the lease ends after a pre-decided duration or when a specific event occurs. Another type is that of "periodic lease" in which the lease gets renewed on weekly or monthly basis or it ends at the will of the either party. Abiding by legal instructions for all the pieces of real and personal property the organization deals in, cause it to land up in a network of rules and regulations.
Further, these set of rules vary from one state to another, thereby making the issue all the more complex. Also, this is a busy industry with about 2000 participants and is the second most-sought after source of finance for American companies, after "Loans".
The resolving of a case, when it gets screwed up depends largely on the nature of the entity that was leased. For instance, in case of car leasing, issues like "the quality of vehicle at the time of leasing and re-acquiring" have un-countable estimates and answers. This increases the "possible conflicting situations" among the parties.
Though this concept started with the leasing of large and heavy equipments such as Aircrafts and computers, in the present scenario it has got expanded to "less thought" materials like handbags and watches too.
Because of spreading in both "the number of competitors" and "products that can be leased out", opportunities and challenges are quite extensive in nature. Therefore it is imperative to employ a "performance measurement and management tool" to make sure that progress can be made in all deserving directions, that too in a concentrated manner.
Balanced Scorecards which have specific and appropriate indicators on them have the potential to provide the organization the require tool. The perspectives which one can start with are Financial, Lease Terms and Payments, Customer and Internal Operations.
Financial aspect can be evaluated via KPIs like quantifying the opportunities which the organization had, Debt: Equity ratio, Market penetration Rate and Equipment Leasing Volume. Internal Operations can be obtained with indicators such as Average loans and Leases ratio to core deposits and number of sectors the company has presence in. Customer perspective is to assess the customer base of the organization. The KPIs that can be employed are % rise in the customer base, reduction in complaints and fraudulent cases. Further, the lease terms and payment perspective can be had with parameters like advance payments index, average lease term used and number of factors considered while deciding the amount of re-payments.
Using such a solution will take care of the "performance issues" of the organization and help in accomplishing the tasks with minimum investment of time and resources.