Lease management software is the software that a finance company uses to lease machines and vehicles to businesses. It handles each lease from the application to the signed contract, tracks the leased machine over its whole life, and collects the monthly fee. It is also called lease and asset finance software.
In a lease, the finance company buys the machine and owns it. The business uses it and pays a fixed fee every month. At the end of the lease, the business returns the machine, buys it for a small final amount, or leases it again. This lets a business get the machines it needs without paying the full price at once, which keeps its working capital free for wages and materials.
Consider a road contractor in Indore that needs an excavator costing ₹80 lakh. The contractor chooses it at a machinery dealer. The dealer's dealer management system (DMS) sends the sale to the finance company. The finance company's loan origination system checks the contractor's finances and approves the application. The lease management software then does three jobs.
First, it originates the lease. It calculates the monthly fee, here about ₹1.7 lakh for five years, and produces the contract for signing.
Second, it tracks the asset. It records the excavator's serial number, its insurance, its servicing and where it is. Many construction machines now send their location and working hours over the mobile network. This is called telematics. So the finance company can see if a machine stops working or is moved far away.
Third, it collects the money. Every month, it bills the fee and records the payment. If a payment is missed, it passes the account to debt collection software.
The same software often manages loans to car and machinery dealers for the stock in their showrooms. That loan is called floor plan financing.
How is a lease different from a loan? With a loan, the business owns the machine from the start and pledges it to the lender. With a lease, the finance company owns the machine, and the business pays to use it.