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March, 2006 –
If you think you are making out like a bandit on that lease, it's time to re-read the contract. After all, the leasing company is making money, isn't it?
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Whirlpool Corporation is an $18 billion manufacturer of consumer appliances. Like many companies, leasing is considered to be a preferred and economical method of asset financing. Whirlpool’s Treasury Department wanted to address several issues regarding equipment leasing.
Challenges
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Visibility and control. Treasury needed to be able to distribute leasing projects to Procurement while maintaining visibility of them and ensuring best-fit financing options.
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Lack of updated corporate-wide leasing policy. There was no true owner to update the policy, interpret “gray” areas and ensure consistent application and compliance throughout the business units.
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Inconsistently applied lease vs. buy analysis model. Treasury had a lease vs. buy model that was frequently modified, leading to several different versions throughout the company.
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Competitive lease bids. No solution was available to receive competitive bids from multiple lending partners on different types of equipment or a way to consistently communicate financing needs to lenders.
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No central repository for leasing transactions. Pulling together information for analysis and reporting (e.g. Sarbanes-Oxley and FASB 13) was difficult with paperwork sometimes residing in files of multiple individuals responsible for acquiring the asset or paying the bills.
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Solution
Whirlpool deployed Captara’s on-demand asset financing application, including development and dissemination of equipment financing policies and processes company-wide. Treasury is now the first point of contact giving them control and visibility over leasing activity within Whirlpool North America. The business units have a clearer understanding of the financial trade-off between ownership and leasing; consistent operating and capital lease tests automating and ensuring accuracy of 10-K disclosures; and simplified reporting can be customized for audit purposes.
Results
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On a large copier transaction, Whirlpool was able to save over 8% in present value versus the original vendor price and substantially reduced legal review of this contract by using Captara’s industry standard master lease agreement.
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Captara saved the company 5.5% in present value on a $9.7 million forklift transaction, and additionally, the solution facilitated an 8.3% present value savings on a recent $4.4 million personal computer transaction. |
"Captara’s solution helps execute the entire leasing process from the web, giving employees a single view of all of the company’s obligations."
– Blair Clark, VP & Treasurer
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