Operational and financial leasing represent two different forms of ownership. When a lessor owns the equipment and pays for all necessary investments, this is called an operational lease. The lessor retains the residual value of the equipment and takes it back when the leasing period expires. When using financial loan products such as financial leasing, overdrafts and loans, the borrower himself is the owner of the equipment and finances 100% of its value.
In operational leases therefore, the value of the equipment is held off-balance-sheet and the leasing costs are posted in their entirety as direct costs linked to the use of the equipment.
In financial loan products, the equipment is carried to the balance sheet and the company itself must administrate and allocate all costs and depreciations linked to the equipment in order to produce a correct picture of the overall financial implications.
Operational leasing also provides external invoice control. The lessor, who owns the equipment, pays all accounts and checks that it is in accordance with the agreements signed. The lessee simply receives periodic invoices for the lease.