Working with Operating Leases

A rental agreement is an agreement with effectively no set period. It typically automatically renews and there is no requirement on the part of either party to communicate the renewal. Most rental agreements involve a notice term where either party can terminate the agreement without penalty. Operating leases are a more formal arrangement and are characterized by a fixed term and a set of stipulations that cannot be changed during the period of the lease without agreement by both parties. Operating leases may be offered to customers who are looking to reduce the cost of their rental fleet by agreeing to a set number of equipment for a set price and term.

Setup Requirements

Before creating an operating lease, you can enter a Master Lease Agreement (MLA) number and the date the lease expires. This is done in the Customer Rental Information window.

1. Go to Cards > Sales > Customer > Additional > Rental Information.
2. Enter the MLA and the date.
3. Select OK.

Creating an operating lease

The operating lease is created in the Rental Agreement Entry window.

1. Go to Transactions > Equipment > Rental Agreement Entry.

2. Enter the agreement header information. 

   

   If an MLA has been entered for the customer, you will see the green checkmark icon next to MLA.

3. Mark the Operating Lease checkbox.
4. To enter the operating lease information, select the Expansion button. In the Operating Lease Information window, you can set up a unit quantity limit, option to enforce term and to use a common end date. The information entered in Lease Information is for the whole agreement, not individual lines.
5. Complete the fields in Lease Information, as appropriate:
   • Agreement No.
     The agreement number defaults from Rental Agreement Entry.
   • Lease Term
     The lease term displays in months.
   • Quantity
     Enter the maximum count quantity of equipment for the operating lease agreement. The equipment model is used to determine whether a given rental line counts towards this quantity limit. The Rental Unit Weighting value is assigned in Equipment Model Maintenance (Cards > Equipment > Equipment Model). If an equipment model is set up with a unit value, the equipment will be counted as "1" towards the quantity. If an equipment model is set up without a unit value, the equipment will not be counted towards the quantity. An example might be a tracking device that you want added to the operating lease, but that you do not want to count towards the quantity limit of equipment.
   • Enforce Term
     Mark this checkbox to ensure that Rental From and Rental To dates for all lines equal to the number of months entered in Lease Term.
   • Common End Date
     Mark this checkbox to establish the same rental end date. Every time a new piece of equipment on the lease goes On Rental, the Rental To date is calculated based on term, and the Rental To date for all other lines is changed to the same value. If both Enforce Term and Common End Date are marked, the system will first calculate the Rental To date based off the number of months entered in Term. Then the system will update all the Rental To dates to whichever date is the latest. The result is that some dates may not have the same length of time anymore. When Operating Lease is marked and you are transferring a line to another agreement, the system will check the number on non-zero credit weighting items with the number of units value in the destination rental agreement. For more information on transferring, see Transferring Rental Agreement Lines.
6. Select OK to return to the Rental Agreement Entry window. The Rental From date on each line calculates based on the Rental To date and the Lease Term value.
7. Complete the remainder of the Rental Agreement Entry window. For more information, see Creating a Rental Agreement.