The leasing industry is massive. There are over $5 trillion worth of assets leased by corporations around the world.
Companies often lease rather than buy many of the assets they use to run their business. The simplest example is office space. Most companies lease rather than owning the buildings their employees work in. Businesses also lease computers, trucks, forklifts, photocopiers, furniture, machinery, and other types of equipment. In fact, the typical Fortune 500 Company has between 1,000 and 10,000 leases representing a dollar value of $100M and $1B.
Despite the relatively large dollar value of these portfolios there has been relatively little use of technology to automate the business processes for leasing at large companies. Processes such as obtaining financing, tracking the assets, and renewing the leases at the end of a contract term have been handled via email and Microsoft Excel spreadsheets.
The automation opportunity for enterprise leasing is relatively unique. Not only is it large with $5 trillion of spend annually, but Leasing is one the last major business processes that has yet to be disrupted by technology. There has been a lot investment in technology by the suppliers – financial institutions that offer leasing products. In fact, there are over 50 vendors that provide technology for selling and servicing leases, many of whom have offered software for over 20 years. However, before LeaseAccelerator was founded there had been very little investment historically in the technology designed for customers who use the real estate and equipment assets being leased.
LeaseAccelerator was founded with a vision for reinventing how Global 2000 companies manage their lease portfolios. The Founder & CEO, Michael Keeler, believes that just as every large company has purchased specialized applications for submitting travel expenses or calculating sales commissions that they would select a specialized application for managing their lease portfolio as well.
From a Startup to a Global Leader
When LeaseAccelerator was founded, the idea that a Fortune 500 company would invest several hundred thousand dollars in software to manage leases was viewed as a “visionary” by most. Market adoption was slow initially. The product was ahead of its time, by almost a decade in fact.
In 2015, the market demand began to materialize, and Keeler raised his first outside capital from a group of angel investors. Over the next five years the market exploded. LeaseAccelerator tripled its revenue, doubled its employee base, and expanded operations into ten countries around the world. Along the way, the company raised over $50M in funding from private equity and venture capital firms. Today, LeaseAccelerator is considered the leader in the fastgrowing Enterprise Lease Accounting software segment. The company’s estimates suggest that it will grow from a $10M market in 2015 to an over $1B market by 2022.
A Thought Leader
There are thousands of advocates for leasing around the world. However, 99.9% of these evangelists work for the financial institutions that underwrite leases and are motivated by the potential profits to be gained by selling more financing products. Michael Keeler is one of the few advocates that has championed the customers over the past 10 years. The customers are those firms that lease and use the assets such as retailers, manufacturers, telecom and energy firms. They are called “lessees” in industry terminology. Michael has been an advocate for CFOs encouraging them to better manage their leasing programs and accelerate Free Cash Flow to drive better shareholder returns. Since 2003, Michael has led the strategy, growth, and vision for LeaseAccelerator as it expanded from a small startup based in his home office to a global leader with operations in countries around the world. To fuel the continued expansion, Michael led the company’s efforts to raise over $50M of investments from venture capital and private equity firms.
In addition to founding LeaseAccelerator, Michael is also credited for inventing the new category of Enterprise Lease Accounting Software. More recently, Michael has been one of the thought leaders educating the market on a new set of lease accounting standards mandated by the US SEC. Over the past few years he has spoken at dozens of industry conferences and tradeshows on required changes to financial systems and business processes to comply with the new standards. Rather than take the tactical, short-term compliance focus of most industry thought leaders, Keeler has been one of the few champions of long-term strategies to improve lease portfolio management.
Digitizing the End-to-End Lifecycle
With LeaseAccelerator, businesses can automate the processes of a leasing lifecycle that include obtaining financing, tracking assets, processing renewals, and performing accounting. Moreover, LeaseAccelerator is the only company on the market that offers a full suite of applications to digitize the end-to-end lifecycle for both major categories of leases – real estate and equipment. The suite includes three major products:
Lease Sourcing – Businesses can use the sourcing application to obtain financing for equipment such as machinery, forklifts, trucks, or computers. An RFP is distributed to a marketplace of over 500 leasing companies who compete to win the business. The one with the lowest financing rates and best contract terms is usually chosen.
Lease Management – Businesses can use the management application to track the whereabouts of all the assets they lease and to manage critical dates throughout the lifecycle. The application automates business processes such as annual rent increases, expansions of floor space, and lease renewals at the end of the contract term.
Lease Accounting – Businesses can use the accounting application to provide the specialized financial reporting that is required by the US SEC and international regulatory agencies for leases. The application ensures that the leases are properly represented as assets and liabilities on corporate balance sheets and that expenses and income are properly reported on the income statement.
Taking Complexity Out of Corporate Leasing Programs
The company’s short-term strategy is to help Global 2000 companies adopt the new lease accounting standards. By moving this “Dark CAPEX” onto corporate balance sheets, shareholders will be able to better understand a company’s true assets and liabilities enabling them to make more informed investment decisions. Publicly traded companies in the US have already adopted this, but most private companies, state, local and federal government entities do not have to comply until 2020 or 2021.
In the long term, LeaseAccelerator’s goal is to take the friction and complexity out of corporate leasing programs. The decision of whether to lease or buy should not be based on which option creates the most administrative complexity for the organization – as is unfortunately the case today. Too many companies choose to buy rather than lease because they will not realize the economic benefits. They fear they will not be able track the assets to return them at end of contract. They fear they will fall victim to predatory contract terms and in turn, add staff to perform complex accounting calculations.
LeaseAccelerator believes that this dilemma can be resolved by using technology, neutralizing the administrative cost differences between leasing and purchasing assets, and enabling companies to make decisions purely based on the optimal economics.
The outcome will be twofold. First, companies will be able to realize a tremendous savings opportunity by more effectively managing their existing portfolio of leases. Second, using automation companies will be able to scale and grow their leasing programs enabling them to realize better cash flows and constantly refresh technology.