More CFOs are open to considering operating leases for at least some capex items than at any time since 2005. Secured Research offers an update to the Q4/23 survey of more than 1,300 mid-sized company CFOs to reveal how the trend may be evolving.
Percentage of CFOs Willing to Consider Operating Leases for Capex
| 1 | Manufacturing | 15% | 40% | 39% | 42% |
| 2 | Food and Beverage | 12% | 32% | 28% | 39% |
| 3 | Transportation | 8% | 21% | 24% | 22% |
| 4 | Construction | 6% | 18% | 19% | 19% |
| 5 | Wholesale/Distribution | 8% | 12% | 10% | 15% |
| 6 | Technology | 17% | 30% | 33% | 28% |
| 7 | Retail | 9% | 16% | 22% | 27% |
| 8 | Healthcare | 4% | 21% | 25% | 29% |
| 9 | Energy | 12% | 18% | 19% | 24% |
Three Quotes from Mid-Size Company CFOs:
CFO | Rapidly Growing Data Center:
“Given the rising costs of equipment and technology, coupled with higher costs of capital, operating leasing has become a more attractive option for us. Leasing allows us to manage our cash flow more effectively, preserving our cash reserves for other strategic investments. Additionally, with tighter bank credit, it’s become increasingly difficult to secure loans for large capital expenditures. Leasing provides us with the flexibility to upgrade our technology without the significant upfront costs associated with ownership. This shift from an ownership mindset to a consumption mindset is crucial for maintaining our competitive edge and financial stability.”
CFO | Oil Field Services Company:
“The current economic environment has made it essential for us to consider operating leases more seriously. High equipment costs and restricted access to bank credit mean that purchasing assets outright is not always feasible. Leasing enables us to stay current with the latest technology and equipment without depleting our cash reserves or incurring high-interest debt. Embracing a consumption mindset rather than an ownership mindset allows us to remain agile and responsive to market changes, ensuring that we can scale our operations efficiently as needed.”
CFO | Healthcare Provider:
“Operating leasing has become a critical strategy for us due to the increased costs of technology and tighter financial conditions—tighter bond market in particular. Leasing helps us accelerate a theme that’s been building through ‘as-a-service’ solutions. They essentially act like full-service operating leases in many cases and once 2023 financial conditions landed, it only made sense to take the operating lease principal behind as-a-service and shift to a consumption mindset instead of an ownership mindset. This aligns with our goal of maximizing operational efficiency and minimizing financial risk.”
Missed Opportunity?
These points collectively underscore why operating leasing is a more serious consideration for mid-sized companies today, given the current economic challenges. Could CFOs still anchored in ZIRP thinking be missing a better opportunity for funding CAPEX?
