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REGION: GERMANY
International financing models

Facilitators at international level

In this interview, Matthias Dreizler, Head of International Business at CHG-MERIDIAN, talks to us about financing models and how they can be applied in an international context.

Mr. Dreizler, as someone who manages relationships with international customers, you have a good insight into the available options and the requirements in IT procurement. How can companies get a meaningful overview of the leasing and rental solutions market?

Getting an overview is difficult. You will find many pay-as-you-x models and proprietary leasing and rental options on the websites of manufacturers, system houses, and outsourcers, but as is so often the case, the devil is in the detail. If you are faced with the question of whether to lease or rent, I recommend that you talk to a partner who offers both and who specializes in the field. This is how you can get a comprehensive overview and find the right structure for your project.

The current economic uncertainty is having a big impact on companies’ willingness to spend. What differentiates the financing models on the market?

The difference between leasing and renting is not as big as it is often made out to be, and there is little point in discussing which model is better without knowing more about the customer’s project. Our customers want a fixed monthly rate that includes all services, a single point of contact, and as much flexibility as possible. I can meet all these requirements with a rental or a lease agreement. From a legal standpoint, the only difference is that with leasing the warranty passes directly to the lessee. Rental agreements can often be processed more quickly, as they cover predefined service packages. With leasing, the customer selects each service separately and decides whether to perform these services itself or to bring an external partner on board. In this case, the flexibility is much higher.

Matthias Dreizler, Head of International Business at CHG-MERIDIAN

"With leasing, the customer selects each service separately and decides whether to perform these services itself or to bring an external partner on board. In this case, the flexibility is much higher."

Which financing model would you recommend to companies that need to set up IT infrastructure at locations around the world while keeping costs down?

At the international level, finding the right financing model is more difficult. The terms ‘rent’ and ‘lease’ themselves have entirely different meanings in other European countries than they do in Germany. It is also worth noting that the rental model requires the provider to have a presence in the country concerned. This is not the case with leasing, and that makes international solutions more straightforward.  In an international context, I would always recommend leasing, as it is much more flexible in terms of financing options and the level of service available in the respective countries.

Are use-based concepts such as pay-per-use, which has been common in leasing for a long time, the best solution?

It depends. First of all, I should point out that pay-per-use is available for both rental and leasing agreements. But as the name suggests, the benefit of this option is that I only pay based on my usage. A common misconception is that you only pay if you actually use the service or product over the term of the contract, but all reputable providers stipulate a certain minimum purchase over the term, of course, otherwise the financial risk would be too high. Pay-per-use is particularly suited to customers with a very seasonal business or who – for organizational reasons – require a high level of cost transparency and clear cost allocation.

 

Matthias Dreizler, Head of International Business at CHG-MERIDIAN

"I believe both leasing and rental will play their part in the future. They are by no means mutually exclusive; it all depends on the customer’s project requirements."

Where do you see the greatest opportunities in the market for rental and leasing models in the future?

I believe both leasing and rental will play their part in the future. They are by no means mutually exclusive; it all depends on the customer’s project requirements. At the international level, I consider leasing to be the better option, as this model can be structured with much greater flexibility. Leasing is also more cost-effective over the long term, while renting is a good alternative for customers who need a quick, ready-made process and who do not require a custom solution.

Thank you for talking to us today.

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