Quick Reference
A
Activation
The process where 1pm (Lessor) turns a lease into an active agreement. 1pm will have received all of the correct paperwork and advanced payment, if required, and the supplier's invoice will be paid.
Arrears
An agreement is considered to be in arrears when the rental due date has passed without the rental due having been paid by the lessee. Arrears are normally classified by the number of days which have passed from the due date without the rental being paid (that is, days in arrears).
B
Board Resolution
This is a document conveying the Board of Director's approval of a specific action, such as empowering an individual to sign an agreement.
C
Capital Allowances
These are tax allowances which the owner of equipment is entitled to claim against their taxable income. When the agreement is a lease agreement, the lessor claims the capital allowances.
Certificate of Acceptance
A document whereby the lessee acknowledges to 1pm that the equipment to be leased has been delivered and allows the lease agreement to be begin.
Consumer Credit Act - 1974
This act lays down certain requirements for the protection of sole traders and partnerships. Further information can be obtained from any Trading Standards office.
Consumer Credit Act Licence
This must be held by any company who wishes to offer credit facilities.
Credit Line
A credit line may be established for a lessee when 1pm anticipate that they will sign several agreements within the next six months. The amount of equipment cost the lessee will rent is estimated. Subject to the financial status of the lessee, 1pm can approve a credit line equal to that amount. Then, as individual contracts are signed and sent in, the credit review process is minimised until the approved credit line is used up.
D
Default
A lessee who is in violation of any term or condition of the agreement, including, but not limited to, arrears.
Due Date
The date of the month on which a lessee’s rentals will be collected by direct debit, or will be expected by debit/ credit card or standing order.
E
Economic Life (of leased equipment)
The estimated period during which the equipment is expected to be economically usable by one or more users, with normal repairs and maintenance, for the purpose for which it was intended at the inception of the lease.
F
Fixed Assets
Tangible or 'real' assets used in a business for a number of years for profit generation and not held for resale.
Fixed Term Rental Agreement
There can be no secondary period on this sort of contract and the equipment has to be returned at the end of the agreement.
G
Gearing
A key ratio for assessing a company's stability and credit worthiness. Gearing is the amount of the company's finance which has been borrowed as a percentage of net worth. Lending to a highly geared company involves a higher degree of risk.
Guarantee
A written guarantee that confirms that a third party (either individual or company) will guarantee the lessee's obligations under the 1pm agreement if the lessee becomes, for any reason, in default under the terms and conditions of the agreement.
I
Initial Period/Minimum Period/Primary Period
The 1pm agreement initial period begins on pay-out to the reseller/ supplier by 1pm and continues until the lessee has made all the payments and fulfilled all its obligations in the term of the agreement specified in the document.
L
Landlord's Waiver
A document which protects a lessor's equipment from being considered part of a property and thus irremovable. This document primarily protects the lessor's rights to the leased equipment, when permanently installed in a lessee or landlord's building.
Lease
A contract through which an owner of equipment (the lessor) conveys the right to use its equipment to another party (the lessee) for a specified period of time (the lease term) for specified periodic payments.
Lease Term
The contracted minimum period of the agreement including any secondary period.
Lessee
The user of the equipment being leased.
Lessor
The party to a lease agreement, who has legal title to the equipment, grants the lessee the right to use the equipment for the lease term and is entitled to receive the rental payments.
M
Minimum Period
See Initial Period.
P
Payment in Advance
Periodic payments are due at the beginning of each period.
Payment in Arrears
Periodic payments are due at the end of each period.
Present Value (PV)
Value today of a future payment, or stream of payments, discounted at the appropriate rate.
Primary Period
See Initial Period.
Purchase Order
A document from 1pm addressed to the reseller/supplier giving them the authority to supply the equipment to the lessee.
R
Renewal Rentals
The rentals which are due in the secondary period of the agreement.
Rental
The sum paid by a lessee at regular specified intervals during the period of the agreement in return for use of rented equipment.
Rental Agreement
A contract between the lessor and a lessee for the hire of a specific asset selected by the lessee and supplied by a vendor. The asset is sold by the reseller/ supplier to the Lessor who retain the ownership of the asset. The lessee has possession and use of the asset in return for payment of specified rentals over the lease term.
Rental Profile
The frequency and number of rental payments.
S
Schedule of Equipment
A schedule is the part of a 1pm agreement which specifies all the equipment details.
Secondary Period
At the end of the minimum period, the lease may be extended for a secondary period. The rental for this secondary period is the same as during the minimum period, unless the lessee has negotiated a reduced rate. If the equipment is returned at the end of the minimum period, no secondary rentals are payable. There is no secondary period on a Fixed Term Rental Agreement.
Settlement Figure
This is a sum needed to settle a lease.
Subsidiary
Legal entity whose equity is owned by a "parent."
T
Termination Payments
Amounts due from a lessee to a lessor at the end of a lease. Such payments usually arise where a lease is terminated early:
by the lessee's choice, or
by default.
Terms and Conditions
The terms and conditions of each Rental agreement set out the rights and obligations of Lessor and the lessee.
Title Payment
Amount due from the lessee to a third party in order to purchase the equipment on lease. The third party must settle the agreement with the lessor before title can be passed.
Trading As (T/A)
The trading name under which a lessee is doing business.
U
Useful Life
The period of time during which an asset will have economic value and be usable. The useful life of an asset is sometimes also referred to as its economic life.
V
Vendor
The supplier of the equipment in a leasing transaction.
W
Writing-Down Allowance
The amount of the asset's cost which the owner may charge each year against its taxable income.
