Lighting As a Service Now On Balance Sheet
One primary advantage of Lighting as a Service was the ability to treat future payments as off-balance-sheet.
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
