According to the latest procurement intelligence report from Technavio, the global equipment financing services market is expected to grow at a CAGR of 5.2% over the next five years due to the need to maximize productivity and efficiency by adoption of equipment financing services.
The research report titled ‘Global Equipment Financing Services Market: Procurement Market Intelligence Report 2017-2021’ provides an in-depth analysis of category spend, best procurement practices and cost saving opportunities, aimed at helping organizations achieve superior business performance. The report also provides insights on pricing, supplier positioning and top companies, enabling sourcing professionals to improve their competitive advantage through procurement excellence.
“The global equipment financing services industry is fueled by the rise in new business volume along with the competition that drives firms to maximize productivity and efficiency by adopting measures such as procurement of equipment financing services, which provide competitive advantages,” says lead Technavio procurement specialist Angad Singh for category spend intelligence. “In addition, rise in investments in the construction, transportation, and IT sectors will also drive the market,” adds Angad.
The adoption of various cost-optimization levers helps buyers of equipment financing services realize direct cost savings and enhance category management and value benefits (including reduced procurement complexities).
Technavio procurement experts have segmented the cost saving opportunities in the equipment financing services market into the following value-enhancement opportunities:
- Adoption of technology
- Supplier Competition
- Adoption of negotiation strategies
- Optimization of procurement practices
- Bundling of services
Technologies such as web-based applications, data management systems, RTLS, and predictive analytics allow buyers to obtain useful insights about the equipment as well as the profitability of the financing service. Buyers focus on adopting and implementing centralized programs and systems that enhance visibility into the service and facilitate better program governance.
Optimization of supply pool segregation is critical in the global equipment financing services market. Technavio analysts suggest benchmarking the services provided by suppliers in terms of contract period and pre-closure options and negotiation with supplier in terms of interest rates. Buyers also prefer suppliers that understand the requirements in terms of cash flow, budget, and tax requirements to structure an efficient financing program that meets buyers' tax requirements.
One of the most opportunistic strategic cost saving levers in the global equipment financing services market is the bundling of services. Assistance in equipment selection and periodic performance review of the equipment (in equipment leasing). Hence, buyers prefer using RTLS that track and manage assets and equipment in real-time. Such systems also allow buyers to reconsider their asset/equipment use.