Paul Hollick's blog: 30 July - The lost art of calculating a lease rental
30 July 2015
Paul Hollick is the chairman of the ICFM.
Technology has changed people's lives, of that there is no doubt. And sadly, as we are supported increasingly by the technology interfaces around us, in some circumstances, our brains sometimes get used less and less.
A great example of this is how we are guided more and more by our Sat-Nav systems to a point where drivers will blithely follow the things to the ends of the earth. In some examples this literally happens as drivers drive across fields and woodlands just to stick with their Nav systems!
As a trend, we are finding more menial tasks are automated - this undoubtedly will also include driving/ hands on the steering wheel in the future but it also includes more complex areas as well, of which I would include the ability to calculate a lease rental.
I personally do not think this calculation is particularly complex, in fact, when I run through this topic for the ICFM Finance Module, most of the students are initially very worried about the task at hand but they soon realise that it is incredibly simple once you know the base principles. By the end of the session, to a student, everyone can calculate the rental per month, including SMR and RFL.
Having been in the leasing world for quite a while, I don't just see this trend within the fleet manager community but also the leasing world as well. Many individuals running quotations to customers cannot calculate the lease rental manually. Why is this? The simple answer is automation. Leasing systems do it automatically, so no one needs to then know.
I do think that with an understanding of the calculation, fleet managers will be able to set improved tenders, select their partners more appropriately and also better understand the RV/ cost/ discount/ interest charge dynamic that is prevalent in all leasing deals, especially the sometime volatile nature of setting appropriate residual values and the "Lease vs Buy" strategy.
This is also, in my opinion, an essential skill necessary in all client facing roles in leasing, fleet management and mobility companies, which will enable their staff to better communicate to customers the reason why quotes are different when many particular features are the same - I refer in the main to vehicle P11d value and interest rates.
Obviously, in some areas the ability to calculate a lease rental is a lost art. Maybe it is time to bring this real world skill back.
Also, maybe time for an ICFM training course?