One primary advantage of Lighting as a Service was the ability to treat future payments as off balance sheet. It now appears Lighting as a Service will be required to be shown as a liability on balance sheets instead of buried as a footnote due to most agreements constituting a lease or a rental. Here’s a great article that explains the change: https://www.cnbc.com/2019/02/15/a-big-change-in-accounting-puts-3-trillion-on-corporate-books.html (and a deeper dive: https://www.monitordaily.com/article-posts/service-contract-new-operating-lease/)
There are still many reasons the ‘As a Service’ model can be the right financing solution for your customer. They include: 1) Eliminating the need for a personal guarantee or other real property collateral, 2) full wrap warranty coverage that covers both the product and labor, 3) up to 10 year service agreements with periodic inspections, and 4) easy to add new energy solutions and/or upgrade to a better solution as technology and customer needs change.
At Retrolux, we’re committed to helping our clients easily access the right type of financing for their end user customers and believe Lighting as a Service is a great option for the right pre-qualified end user.
Leif Elgethun, CEO