Published on February 24 2010

As reflected in a recent ELFA article (ELT January 2010, “Boring but Better”), I believe that 2010 is likely to be a ‘slog’ as far as the leasing and equipment finance industry – and much of the rest of the economy – is concerned. I see this being highlighted in our industry by some key features. Firstly, our industry faces an ongoing restriction on capital. While many companies have been successful in raising funds over the last 12 months, much of it has been to replace existing lines that are expiring. Only when we see genuine new capital being raised, with real money coming off the sidelines, can we breathe a bit more easily. Coupled with this are ongoing high levels of delinquency and default, which will be a feature of the industry for some time, again limiting available cash. On the demand side, as illustrated by a recent Journal of Commerce article, companies and consumers continue to live off their inventory and this trend will only gradually reverse, especially in larger, long-life assets. Additionally, the ongoing consolidation and instability within the industry players will tend to promote conservatism and introversion, (although this myopic view will ultimately open up opportunities for more fleet-of-foot players to carve out a new niche). More widely, globalization, while it has paused, hasn’t gone away, and the continuing strength of other economies (including China, India, Australasia and parts of Europe) brings both an opportunity and a threat. And finally, no-one can doubt that more regulation will be a feature of 2010 and beyond. IFRS accounting changes and new Federal and State regulations will all bring more pressure and potential penalties onto compliance and reporting functions.

However, looking at publications such as ELFA’s Beige Book, confidence and even cautious optimism does seem to be returning to the industry. Some of the MLFI-25 figures are either flattening out or even starting to turn, there is a general expectation of better access to capital, and we can see reports of higher equipment spending plans in some key areas such as IT. “If we’re still standing now,” goes the argument, “things can only get better - slowly”.

So, how do I expect industry leaders to react to these contrasting pressures? I believe that, as well as an increased focus on efficiency and effectiveness – having to do yet more with less – we will see leaders focusing this year on their future strategy. Leaders who can envision a future in which they can continually reinvent their processes and their business, and can act to bring that future into the present.

In particular, where do I expect to see these leaders focusing? Five key areas come to mind:

• Flexibility: being able to change their way of doing business and turn it on a dime. This requires an effective and motivated workforce, plus flexible systems which can support this sort of change; workflow-based systems, coupled with Business Rules Engines which can encapsulate and roll out the new and evolving ways of doing business. It’s being able to launch new products and new functions with just simple parameter changes. As an example in the service provider segment, while full systems implementations have been slow, we ourselves have been able to focus instead on providing effective consultancy work for our clients, conducting smaller projects which add value more immediately.


• Information: being able to understand what is really happening in the business in usable, timely forms. Our experience here is that business leaders are really starting to ‘get’ this, and we are helping our customers deliver and get benefit from Business Information (BI) systems, dashboards and real-time alerts, driven by integrated information databases, often extracting from multiple sources, and using this data to meet the needs of the evolving regulatory picture.


• Customers. Now more than ever, knowing all there is to know about your customer is key. This entails capturing and analyzing credit data, providing class-leading customer service and self-service systems, and growing and maintaining customer loyalty in new and creative ways, within a consistent management strategy.


• Collections. Even in delinquency situations, the customer is king. You need to be able to provide reactive and proactive collections strategies – and ahead of other creditors – tailored to the individual customer situation. This is achieved with workflow to provide national or global processes, using business rules to do so with a local flavor, and by being able to consolidate or disaggregate data, cash and processes as cases unwind.


• Growth. If you’re not shrinking, then you should be growing. Tools in this area include being able to operate a multichannel, multiproduct, even multicountry business as easily as a monoline one. This also includes looking outside of ‘the current model’ for opportunities, and being able to support them; being able to deploy new tools, technologies and techniques simply and easily; and making sure that you are ready to access capital in whatever way it may become available this year and next.

So – what is my evidence for this resurrection of progressive thinking in the industry? From where I sit, we have seen more serious Requests for Proposal (RFPs) already this year than in the previous two years combined, and we see industry leaders who are looking to have their new ideas and plans in place over the next 12-18 months. As for us, we plan to be doing whatever it takes to help the industry to succeed in 2010 and into the future – I hope to see you there!

Author Bio
Justin Cooper is President of CHP Consulting, the leading global information technology consulting provider to the leasing and equipment finance industry and developers of ALFA Systems. He has been working with the leasing and equipment finance industry in North America and Europe for over 20 years. Reach him at .(JavaScript must be enabled to view this email address) or at www.linkedin.com/in/justincooper99.