A Software Leasing Program Can Be A Supplement to Venture Capital, Mezzanine or Bank Financing
  • Unconventional concept, but very logical
  • The faster you increase your cash sales, the less the need for external financing
  • A software leasing program for your customers can increase and quicken your sales
  • Thus, a software leasing program can lessen the need for external financing

What Are The Basic Functions Of A Leasing Company
  • Fund software/hardware purchases in return for payment over time
  • Take credit risk and software/hardware risk
  • Provide tailored solutions to customers needs
  • Proved a vendor the ability to offer the customer extended payment terms without having to finance the payments

What Is Software Leasing
Software leasing is a sales and marketing tool designed to provide software developers with a lease financing alternative for their customers. The result can be an increase in revenues, a decrease in sales time, and an increase in customer satisfaction levels.

It is also a method of paying for software over time instead of a single upfront payment and the functional equivalent of a loan from the leasing company.

Benefits To Customers
  • Obtain all the products and licenses that are needed now
  • Eliminate or reduce capital budget approval delays
  • 100% financing
  • Preserve bank lines - or eliminate the need for a line
  • Consulting, hardware, customization, and training costs can be included in the lease
  • Easy to subsequently add or upgrade hardware, licenses, and consulting
  • Customer owns the license to use the software at the end of the lease
  • Simple documentation
  • For the large company - solution to capital budget delays
  • For the middle-sized company - convenience
  • For the small or new company - an excellent source of funds (maybe)

Benefits to Software Developers
  • Shorten the sales cycle
  • Expand your customer base
  • Better satisfy customer needs - tailor the lease to the need
  • Improve your competitive and financial position
  • Gain you a competitive advantage
  • Obtain marketing support from your leasing company
  • Obtain increased revenues through flexible financing plans with upgrade provisions
  • Obtain an extensive financing program with no financial obligations on the part of the partner
  • Avoid obtaining bank lines to carry lease financing
  • Avoid establishing lease billing and financial lease accounting systems

How Do I Determine If A Leasing Program Will Benefit Me
  • Is your average sale greater than $5,000?
  • Do you sell direct to the user?
  • Are your customers of relatively high credit quality?
  • Do your customers normally lease hardware?
  • Do your customers have budget limitations?
  • Do your customers have financing limitations?
  • Is your license transferable?
  • Are your sales greater than $1,000,000?
  • Have you ever leased software or hardware - as a lessor?
  • Have you ever leased software or hardware - as a lessee?
  • Do you have the time to explore leasing with a leasing company?
  • Do you want to explore leasing with a leasing company?

If all or most of the answers are "yes", leasing software may well benefit you and your customers.

What To Look For In A Leasing Company
  • Experience in leasing
  • Experience in your business or the software/hardware
  • Reputation, particularly for fair dealing
  • Service - work with you and your sales force to individually address the needs of each customer and customize a proposal that meets those needs
  • Train your sales force
  • Efficiency - complete credit approval and lease documentation quickly
  • Financial strength or access to capital
  • Competitive pricing
  • Assume all credit risk

How To Do Business With A Leasing Company
  • Explain your business
    Software Characteristics
    Customer Characteristics
    Distribution Methods
    Pricing-Per Item and Average
    Plans for the Future
  • Discuss if and how leasing might favorably impact your business
  • Discuss how a leasing company will interface with your customers
  • Discuss administrative aspects of the relationship

What A Leasing Company Looks For - Ideally
  • Acceptable credit risk
  • Some risk protection from value of software/hardware or other collateral
  • Acceptable return for the risk
  • Potential upside from software/hardware at the end of the lease
  • Maybe some tax benefits
  • Some minimal level of business

© LPI Software Funding Group, Inc.  

593 Cricket Lane, Suite 200     Wayne, PA 19087  

610.687.4434      610.341.6100   sales@lpilease.com
                         February 27, 2006