5 Equipment Leasing Process Gaps That Create Unnecessary Costs

December 17, 2025

Equipment leasing represents significant financial exposure for most organizations – a often without the strategic attention it deserves.

The equipment financing industry encompasses $1.34 trillion in annual volume, yet many organizations pay substantial cost premiums due to process inefficiencies. These inefficiencies stem from preventable gaps in lease management strategy and execution. Industry veterans VP of Strategic Sourcing at insightsoftware Tammera Ward, and Program Managers at insightsoftware Dyanne Wallbank and Audra Kirby recently identified five critical process gaps that create the largest cost impacts –and the operational changes that address them.

Why Process Optimization Matters in 2025

Current market conditions create a particularly advantageous environment for equipment leasing improvements. Industry confidence recently reached 61.6%, marking a four-year high. Companies are planning an increase in equipment spending, despite prices moderating. Organizations that move strategically can capture meaningful advantages. “We’re witnessing the most dramatic shift in equipment leasing confidence and market dynamics in over four years,” says Ward.

For organizations still operating with the five process gaps outlined below, the opportunity cost extends beyond direct overspending – you’re potentially missing the most favorable equipment financing conditions since 2019.

Gap #1: Manual, Decentralized Leasing Processes

When multiple departments manage leases independently without coordination, the inefficiencies compound quickly. Different teams pursue similar equipment acquisitions separately, negotiate terms in isolation, and duplicate administrative work across the organization. “A decentralized equipment leasing process can impose significant costs… organizations still using manual processes are likely to overspend by 25 to 30% on administrative tasks alone” says Kirby.

The financial impact includes organizations using manual processes typically overspend by 25-30% on administrative tasks alone. Duplicated efforts across departments consume time and resources. Poor lease terms result from inability to leverage aggregate volume. Missed renewal deadlines lead to unfavorable auto-renewals, and manual processes introduce errors that create downstream complications.

Consider that even a 1% evergreen waste rate –leases that auto-renew because renewal notifications went unaddressed –represents $6.7 billion in unnecessary costs across the industry annually.

The solution: Centralization and automation transform these inefficiencies. Organizations using platforms like PureLease from insightsoftware access 500+ lessors across 80 countries with automated competitive bidding. This approach delivers an average of 7% savings on financing costs and reduces time spent managing RFPs by 40%, with processes that previously required weeks now completing in days.

Gap #2: Insufficient Lease vs. Buy Analysis

The lease vs. buy decision represents one of the most consequential financial choices in equipment acquisition. Yet many organizations make this determination with insufficient analysis or rely on outdated spreadsheets that don’t account for total cost of ownership, obsolescence risk, opportunity costs, and current market conditions.

Organizations that choose the wrong financing method typically see 15-25% higher costs than the optimal approach. For a $1 million equipment purchase, this represents $150,000 to $250,000 in unnecessary costs. Interest rate differentials of 3-7% translate to $300,000 to $700,000 annually for companies spending $10 million on equipment.

For context, a manufacturing company spending $5 million annually on equipment leases who accepts vendor financing at 12% instead of securing competitive bids at 8% will overpay $1.2 million over five years.

The solution: Implement a structured analytical framework that includes net present value comparison, total cost of ownership calculations, risk assessment for obsolescence, and real-time market rate comparisons. Digital lease vs. buy calculators eliminate the spreadsheet errors that cost organizations millions and integrate analysis into standard acquisition processes rather than treating it as an optional step.

Gap #3: Accepting Vendor Financing Without Competitive Bidding

When equipment vendors offer financing, the convenience often obscures the cost. The path of least resistance –simply accepting the vendor’s terms – can carry substantial financial implications. “Banks handle 59% of equipment financing, but manufacturers and vendors only handle 17%. That tells us there’s a huge competitive market out there that businesses are completely ignoring,” says Wallbank

Vendor financing rates typically run 20-40% higher than competitive market rates. For a typical $500,000 equipment lease, this represents an additional $35,000 to $70,000 over the lease term. Scale that to a $2 million transaction, and you’re looking at $140,000 to $280,000 in excess costs.

A manufacturing company spending $5 million annually on equipment leases who accepts vendor financing at 12% instead of obtaining competitive bids at 8% will overpay $1.2 million over five years – capital that could fund growth initiatives, operations, or improve profitability.

The solution: Embrace competitive bidding as standard practice. Obtain at least three to five competitive quotes with standardized comparison criteria. Platforms like PureLease Marketplace connect organizations with 500+ lessors who compete for your business, delivering an average 7% savings on equipment costs. For a $1 million annual portfolio, this translates to $70,000 in annual savings or $350,000 over five years.

Gap #4: Non-Standardized Lease Agreements

Custom lease term negotiation for every transaction slows deal execution, increases legal fees, elevates risk exposure, and introduces inconsistencies that create disputes later. The industry-wide cost of this inefficiency ranges from $6.7 billion to $26.8 billion annually. Non-standardized agreements typically favor the lessor, require extensive legal review that delays execution and increases costs, and create inconsistent terms that complicate portfolio management.

The solution: Adopt standardized lease agreements as your foundation. Benefits include consistent risk allocation, proven legal language, built-in compliance with industry standards including ASC 842 and IFRS 16, and dramatically reduced processing time. You maintain the ability to modify terms when business circumstances require it, but you start from a balanced, efficient baseline rather than negotiating from scratch each time.

Gap #5: Inadequate End-of-Term Management

This represents where intentions meet execution challenges. Renewal reminder emails arrive, teams acknowledge them, but they get deprioritized during busy periods. The result creates significant financial exposure.

Research indicates 15% of contracts expire without timely renewal, causing business interruptions and operational disruptions. Poor contract management costs companies approximately 9.2% of annual income. Missed deadlines result in late fees, penalties, and auto-renewals on unfavorable terms. Leases “evergreen” indefinitely, transferring control and negotiating leverage to the lessor.

The root problem stems from disconnected teams. Legal, operations, and finance work in silos. No single function maintains a comprehensive view of upcoming expirations, and suddenly you cross critical deadlines without adequate preparation.

The solution: Centralized end-of-term management with automated alerts sent well in advance provides the necessary lead time for strategic decisions. PureLease Marketplace manages the entire lessor communication process – from discussing provisions to renegotiating terms to clarifying return criteria. Everything operates through standardized processes with complete documentation, shifting the approach from reactive to proactive.

The Strategic Opportunity

Organizations with a $3 million annual equipment lease portfolio typically face approximately $210,000 in annual unnecessary costs from these five process gaps. Over a five-year equipment refresh cycle, this exceeds $1 million in avoidable expenses. Current market conditions amplify the value of addressing these gaps now. Industry confidence stands at multi-year highs, equipment prices are moderating, and 42% of companies plan to increase equipment acquisitions. The organizations that optimize their equipment leasing strategy during favorable conditions establish sustained competitive advantages.

Transform Your Equipment Leasing Approach

Organizations ready to optimize their equipment leasing strategy can benefit from portfolio assessment to calculate specific savings potential, lease vs. buy analysis frameworks, connection to competitive lessors through PureLease Marketplace, and standardized lease agreements and end-of-term processes.

Schedule a Demo Industry conditions support strategic action. The advantage goes to organizations that move decisively.