If your company is like most, you leased your copier. These leases are a convenient and cost effective way to get the latest technology at an affordable price. But there is a dark side to many of these agreements that you need to be aware of.
Many copier leases have an “Evergreen Clause” buried in the fine print. Don’t be fooled by the friendly sounding name, the evergreen clause is a tricky and unwelcome intruder into your company’s financial structure.
The evergreen clause typically requires you to notify the leasing company in writing, during the last 60 to 90 days of the lease term of your intention Not to continue paying the monthly obligation. That’s right, you’ve made all of your payments as agreed and if YOU don’t tell the leasing company to stop billing you, they may not.
Many times these evergreen clauses contractually obligate you to another 12 monthly payments and you may not even be aware of it! The invoices continue to come just as they always have and your A/P department continues to pay them just as they always have.
Why do companies inadvertently allow this to happen?
The first reason is that it the person who signed the original copier lease may no longer be with the company. This happens very frequently with no one else at the company even aware that the lease is nearing the end of the original term. This is dangerous and can lead to huge and unnecessary expenditures on old and obsolete equipment.
The second common reason is simply that it’s not a high priority. A copier is leased approximately every 48 to 60 months, so tracking the lease simply isn’t top-of-mind. It’s like an old piece of furniture that just blends into the background, except this one has a monthly payment attached to it.
What should you do today?
Find the original copy of your lease agreement. Look for the origination date and the term, usually 36, 48 or 60 months. If you are in the last nine months of the term, assign someone to take on the project of researching the options making sure the evergreen clause doesn’t kick in. If you can’t find the original lease call the leasing company for a copy, their phone number is on your billing statement.
If the termination date of the lease is twelve months or more away, create an alarm in your email or other calendaring system. Set the alarm to notify you and other stakeholders approximately nine months prior to the end date to begin the process of looking into what’s new and relevant to your company. These stakeholders typically include I.T. Directors, CFO’s, department heads and others who depend upon this equipment to keep the document workflows moving efficiently.
Don’t let the evergreen clause cast a shadow over you. If you are nearing the end of the copier lease, you are likely to want a newer, more feature rich model. But without being aware of your lease term you just may find yourself up a tree!