7.5.10 Customer property - applies to leased/rented equipment?

PaulG

Starting to get Involved
#1
We have a client who is switching their business model from selling devices to leasing them and like to get opinions on whether the leased devices are considered customer property when they come back from regularly scheduled maintenance during the lease period.

The client is arguing that the devices are not customer property when they come back for regular maintenance during the lease period because the customer doesn't own them. One of their auditors agrees, but another auditor doesn't.

My thinking is:
1) If the customer is leasing the device and returning it to you at the end of the lease period then it is not customer property.
2) If the customer is leasing the device and returning it to you for scheduled maintenance during the lease period, then you have to handle it as customer property.

Thoughts?
 
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Tagin

Trusted Information Resource
#4
My thinking is:
1) If the customer is leasing the device and returning it to you at the end of the lease period then it is not customer property.
2) If the customer is leasing the device and returning it to you for scheduled maintenance during the lease period, then you have to handle it as customer property.
Agreed.
 

John Broomfield

Staff member
Super Moderator
#6
Don’t forget the possibility of:

3) Customer continues to pay the lease beyond the lease period even if the leased device is no longer working.
 

ThatSinc

Involved In Discussions
#7
If a device comes back for maintenance during their lease period and you send them a different unit (same specs etc.) back, what are the consequences?

I'd be inclined to agree with your assessment in the vast majority of cases, however something like a mobile suction unit that may be on a lease with annual servicing, there is nothing settable/programmable/saveable on the device and the terms of service may state that you may receive another unit of the same specification and condition in return.
In that case I could see scope for it not being customer property on return for servicing.
 

Sidney Vianna

Post Responsibly
Staff member
Admin
#8
As always, risk considerations should be at the forefront; not a nonsensical ownership of the device. What if the equipment is received for servicing/maintenance and there was a significant out of spec condition which could have affected patients previously treated/tested/diagnosed with the device? That condition HAS TO be reported; otherwise is criminal negligence.
 

somashekar

Staff member
Super Moderator
#10
We have a client who is switching their business model from selling devices to leasing them and like to get opinions on whether the leased devices are considered customer property when they come back from regularly scheduled maintenance during the lease period.

The client is arguing that the devices are not customer property when they come back for regular maintenance during the lease period because the customer doesn't own them. One of their auditors agrees, but another auditor doesn't.

My thinking is:
1) If the customer is leasing the device and returning it to you at the end of the lease period then it is not customer property.
2) If the customer is leasing the device and returning it to you for scheduled maintenance during the lease period, then you have to handle it as customer property.

Thoughts?
Hi PaulG.
Its like seeing something where there is nothing.
Your client has to manage the servicing activities per the clause 7.5.4
During this process your client will identify, verify, protect, and safeguard the device.
If he finds that the device is damaged or unsuitable for use, he will report the same to the client upon the receipt and the check. He will do the same even upon finding out any defects during the device being serviced, and report to client, what ever be the nature of transaction., during lease period or at the end. By doing these the customer property clause is being addresses.
You are just doing a good process interaction between customer property and servicing activity.
 
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