The Alta Group https://thealtagroup.com Global Experience Provides Direction Tue, 07 Jul 2020 12:39:44 +0000 en-US hourly 1 https://wordpress.org/?v=5.3.4 Leading industry consultants exclusively focused on commercial equipment leasing and finance. The Alta Group clean episodic The Alta Group randaclay@gmail.com randaclay@gmail.com (The Alta Group) International consultants in financial services, equipment leasing, asset finance, consulting for sales aid finance, vendor and captive programs, contract negotiations, legal witness in equipment leasing The Alta Group https://thealtagroup.com/wp-content/uploads/2016/09/podcastimage.jpg https://thealtagroup.com Managing the Unprecedented Effects of a Pandemic on Equipment Leasing and Finance https://thealtagroup.com/managing-the-unprecedented-effects-of-a-pandemic-on-equipment-leasing-and-finance/ https://thealtagroup.com/managing-the-unprecedented-effects-of-a-pandemic-on-equipment-leasing-and-finance/#respond Tue, 07 Jul 2020 01:40:38 +0000 https://thealtagroup.com/?p=10007 “Managing the Unprecedented Effects of a Pandemic on Equipment Leasing and Finance” published by World Leasing Review Summer 2020 edition provides observations by The Alta Group and Invigors on the painful economic fall-out of Covid-19 written by Valerie L. Gerard, Paul Johnson Ferguson and Rafael Castillo-Triana. Available online at http://newsletter.world-leasing-yearbook.com/summer-2020

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“Managing the Unprecedented Effects of a Pandemic on Equipment Leasing and Finance” published by World Leasing Review Summer 2020 edition provides observations by The Alta Group and Invigors on the painful economic fall-out of Covid-19 written by Valerie L. Gerard, Paul Johnson Ferguson and Rafael Castillo-Triana.

Available online at http://newsletter.world-leasing-yearbook.com/summer-2020

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“MODERN DAY SWINDLERS: Evading Fraud in the Digital World” https://thealtagroup.com/modern-day-swindlers-evading-fraud-in-the-digital-world/ https://thealtagroup.com/modern-day-swindlers-evading-fraud-in-the-digital-world/#respond Tue, 07 Jul 2020 01:34:33 +0000 https://thealtagroup.com/?p=10002 By DOMINIC LIBERATORE & PAUL BENT This feature in the Monitor May/June 2020 edition Common themes in fraud include deception, misdirection and reliance on the good faith of victims. Fraud can happen anywhere, from electronic leases to hand delivered documents signed in ink. Dominic Liberatore and Paul Bent explore fraud in the equipment finance industry […]

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By DOMINIC LIBERATORE & PAUL BENT

This feature in the Monitor May/June 2020 edition

Common themes in fraud include deception, misdirection and reliance on the good faith of victims.

Fraud can happen anywhere, from electronic leases to hand delivered documents signed in ink. Dominic Liberatore and Paul Bent explore fraud in the equipment finance industry and provide recommendations for identifying red flags and challenging suspicious activity.  

Fraud generally does not involve violence or force but instead arises from intentionally misplaced expectations. Common themes include deception, misdirection and reliance on the good faith of victims. Indeed, the “con man” moniker derives from the phrase “confidence man.” This article will provide industry examples, red flags, special considerations in the modern digital world and recommendations to help guard against fraud. Remember, it’s always obvious after the fact.

Read more.

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Pandemic Planning: Muddy Waters or New Waves for Equipment Finance https://thealtagroup.com/pandemic-planning-muddy-waters-or-new-waves-for-equipment-finance/ https://thealtagroup.com/pandemic-planning-muddy-waters-or-new-waves-for-equipment-finance/#respond Tue, 07 Jul 2020 01:23:05 +0000 https://thealtagroup.com/?p=9994 By Diane Croessmann This Monitor May/June 2020 feature explores how the industry can stimulate technology investment through creative financing and usage options. The coronavirus COVID-19 outbreak has shown us how rapidly pandemics can alter public health and global markets. How quickly we recover from these events depends in large part on collaboration from every sector, […]

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By Diane Croessmann

This Monitor May/June 2020 feature explores how the industry can stimulate technology investment through creative financing and usage options.

The coronavirus COVID-19 outbreak has shown us how rapidly pandemics can alter public health and global markets. How quickly we recover from these events depends in large part on collaboration from every sector, including the equipment leasing and finance industry.

Read the article here.

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Manufacturing Best Practices: Creative Cash Flow Strategies for Manufacturers https://thealtagroup.com/manufacturing-best-practices-creative-cash-flow-strategies-for-manufacturers/ https://thealtagroup.com/manufacturing-best-practices-creative-cash-flow-strategies-for-manufacturers/#respond Tue, 07 Jul 2020 01:12:01 +0000 https://thealtagroup.com/?p=9990 Diane Croessmann writes in Manufacturing Best Practices in June 2020 about cash-flow strategies for manufacturers an essential need during the pandemic. COVID-19 has created upheaval at both the personal and commercial level. As many factories and businesses re-open shuttered facilities, they are doing so without a blueprint for the yet to be defined “new normal.” […]

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Diane Croessmann writes in Manufacturing Best Practices in June 2020 about cash-flow strategies for manufacturers an essential need during the pandemic.

COVID-19 has created upheaval at both the personal and commercial level. As many factories and businesses re-open shuttered facilities, they are doing so without a blueprint for the yet to be defined “new normal.” In the absence of proven roadmaps, organizations need to look for methods and processes that make them more adaptable and resilient to future unforeseen events.

Essential strategies to address another pandemic outbreak will include those that protect the health and welfare of employees through work-from-home options, enhanced robotics and other enablers that limit human-to-human contact. However, other essential strategies will also be needed to effectively protect the health and welfare of basic business operations through enhanced cash flow management.

Read the article here.

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Target Operating Model Should Be Designed for Continuous Transformation in Equipment Finance https://thealtagroup.com/target-operating-model-should-be-designed-for-continuous-transformation-in-equipment-finance/ https://thealtagroup.com/target-operating-model-should-be-designed-for-continuous-transformation-in-equipment-finance/#respond Fri, 12 Jun 2020 17:14:49 +0000 https://thealtagroup.com/?p=9958   Digital and business transformation in our industry must be continuous and while technology plays a vital role, it is only one of the pillars for renewal of in-market approaches and organisational processes. This is the crux of an article written by Kieran O’Brien, an Alta consultant with Invigors EMEA who is based in Ireland. […]

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Digital and business transformation in our industry must be continuous and while technology plays a vital role, it is only one of the pillars for renewal of in-market approaches and organisational processes. This is the crux of an article written by Kieran O’Brien, an Alta consultant with Invigors EMEA who is based in Ireland.

With a pandemic effect on global businesses, smart organizations are looking at their business structures and considering how to better position themselves for “the new world order in a post pandemic era,” says O’Brien.

The article in the June edition of Accountancy Ireland defines a target operating model (TOM) and clearly notes the common issues and essential elements of achieving such a business model. “The objective of a TOM is the development of an organisation that will support critical business strategy with clearly developed roles and responsibilities and with measurable skills and capabilities,” writes O’Brien. He notes also that a single TOM may not be applicable to some organizations and may best be structured into individual TOMs that are aligned to each business model that the organization is supporting. This will support a quick TOM adoption and maximize responsiveness.

In particular, he notes that successful business models will have a clear go-to-market strategy and they will include extensive review of all processes, the roles of personnel and how the entity is organized. Company leaders must keep reviewing and evolving their organizational and operational structures to keep their businesses relevant and responsive to changing demands of their customers and shareholders.

O’Brien reports that TOMs are often ineffective due to these common issues:

-The inflexible nature of historic business models, which fail to support a business that is evolving its operations (for example, a financing organisation that is moving from supporting large/complex transactions to a flow business operation);

-In financial services, the continuation of the historic segmentation between ‘front office’ and ‘back office’ when it is evident that both cannot continue to operate independently of each other effectively; and

-Having an operating model that is not aligned to a specific business operation, with the consequence that the organisation develops functional silos that result in process inefficiencies and poor communication.

His article is a quick read with visuals and bullets to summarize subject matter that is  expansive, covering everything from vision to technology; all are essential for continuous internal corporate-wide analysis. This will be needed to truly deliver on an organization’s strategies.

The benefits are worth the effort of developing a TOM. As this piece notes, the examination will illuminate gaps and provide more “clarity around roles and decision-making, often accelerating customer outcomes.”

The key interdependent elements examined in a TOM are:

-organization/people
-go-to-market
-process
-technology

The technology element includes examining core systems in both the front and back end, integrations, ecosystems and sources of data and connections needed to support better decisions and more flexibility for continuous renewal.

Areas for consideration include digitalization, data analytics and services automation.

However, before embarking on a TOM it is recommended that peer entities be evaluated to gain insight into your competitors’ operations and market approach. This will allow more focus on ‘best in class’ elements to consider adopting.

“Designing a new TOM provides an opportunity to optimise the size, structure and shape of your business and ultimately, deliver on your organisation’s strategies,” writes O’Brien.

If done well, O’Brien says, creating a TOM “provides an opportunity to optimise your business operations and reduce your operating cost by looking at various insourcing/outsourcing alternatives. It also provides a significant level of internal transparency to your staff, giving clarity around roles and decision-making and often accelerating customer outcomes.”

Source: Kieran O’Brien, FCA, is Executive Director of Invigors EMEA and is based in Ireland.  Invigors EMEA, part of The Alta Group, works closely with its other regional divisions to help international equipment leasing and finance companies adapt to changing conditions and enter new markets.

 

 

 

 

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 What Is the Industry Doing to Adjust? https://thealtagroup.com/what-is-the-industry-doing-to-adjust/ https://thealtagroup.com/what-is-the-industry-doing-to-adjust/#respond Thu, 04 Jun 2020 13:54:42 +0000 https://thealtagroup.com/?p=9953 What is Equipment Finance Industry Doing to Adjust to Covid-19 Impacts?

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In a Monitor webinar series Vince Belcastro, group head of syndications for Element Fleet Management, moderated a lively discussion with panelists John Deane, CEO of The Alta Group; Robert Boyer, president of BB&T Commercial Equipment Capital; Terey Jennings, president of Financial Pacific Leasing; and Tom Ware, president of Tom Ware Advisory Services.

In this May 26 event, they discussed the industry’s re-adjustments, re-analysis and realignments with a second wave of Covid-19 anticipated. April was not a bad month for the executives. The PPP stimulus was helpful, and customers were able to re-negotiate contracts with payment deferrals and modifications. The question is: what happens in July when most 90-day deferments end?

What’s different about this disruption from other sudden downturns is that there are no guideposts; the last pandemic of this nature was in 1918. But looking back to previous downturns, Deane pointed out that major events in recent history have been in 10- 20-year cycles with the stock-market crash hitting the industry sharply while many were attending the ELFA convention in Las Vegas in 1987, followed by what was called the “perfect storm” triggered by the Dotcom Bubble in the latest 90s and now this. The equipment leasing and finance industry recovered strongly from these as well as the more recent “great recession.”

The Perfect Storm was an in-depth study commissioned by the Equipment Leasing and Finance Foundation and completed by The Alta Group. The study analyzed 10 equipment leasing companies and the reasons why they exited the market. The concern at the time was that there were forces making the leasing industry less attractive. In fact, the forces were individual company-centric, and the industry was fine, said Deane in a recent interview.

In the current downturn, everyone has turned off auto-decisioning and a banker noted a 20 percent reduction in applications with a lot of relief requests, especially from businesses in hard-hit areas like New York.

On the West Coast, Jennings said a lot of his customers—mostly small businesses—were affected. Therefore, his company is delving into new and more varied kinds of analysis than is typical. Obviously, most impacted were those companies that had to close due to stay-home orders. Healthcare and dental were hurt too, he said, but auto repair companies are doing okay. There is some variability based on geography but not as much as you would expect, he said. They are looking at many other variables to determine who will have the ability to continue on. Basically, Deane said they are looking at whether the customer has the financial strength and market position to weather the impact from pandemic-driven economic conditions.

Boyer added that his bank is looking at the full business story when making credit decisions because many problems now are not due to operational or financial performance, and the bank wants to maintain those clients only temporarily “limping.”

There was considerable discussion about various vertical markets and the observation that new approvals may be based more on the sector than the credit story. Deane said larger clients are deciding to stop accepting business from certain verticals for strategic reasons and because they just don’t know how bad it’s going to get.  “Every recession is different,” he said. For instance, Deane said, “wholesale (or buy-desk) business may not be strategic for some lessors.”

In some cases, lessors are seeking equity to support their balance sheets while other are starting to look at selling, he added

The panelists agreed with Deane, who said in answer to many questions that there is not a one-case-fits-all experience in the Covid-19 business environment. However, he said many of Alta’s clients are looking at remodeling business structures, for example, to provide financing for managed services. This is based on the fact that captives are seeing more than 25 percent of business coming from service related activities. (See Diane Croessmann’s article: Pandemic Planning: Muddy Waters or New Waves for Equipment Leasing.)

Ware, who said he has carefully studied Covid-19 stats, remarked if you remove NY and NJ numbers from the equation, US cases were up six percent in late May. It was still spreading at the time of this blog post. In another webinar, Ware said he attended with 1,000 executives in real estate, they predicted the recovery would be a V-, W-, or L- shaped phenomenon. The Monitor asked a similar question of the 397 attendees and they voted on the shape of the economy with most saying it would be U- or W- shaped.

On a positive note, Deane said many clients report there are better spreads; the margins are up because the base cost of funds is down. And, the panelists agreed that when a vaccine becomes available, business will be back strong. Meanwhile, they said that while they anticipate elevated charge-offs this year, they are re-balancing risk-reward equations and remembering that their job requires taking some managed risk.

Source: Monitor Webinar and additional commentary from John C. Deane, CEO of The Alta Group.

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Technology Adopters Prove Better Prepared to Survive Covid-19 Economy https://thealtagroup.com/technology-adopters-prove-better-prepared-to-survive-covid-19-economy/ https://thealtagroup.com/technology-adopters-prove-better-prepared-to-survive-covid-19-economy/#respond Tue, 02 Jun 2020 16:33:54 +0000 https://thealtagroup.com/?p=9946   Alta Consultant John Hurt in a recent Monitor podcast said equipment leasing companies that were early adopters of digital technology solutions and weren’t reliant on paper have adapted more quickly to working remotely during the Covid-19 pandemic. The coronavirus and subsequent stay-at-home orders quickly illuminated sizeable gaps in equipment finance processes and business operations […]

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John Hurt

Alta Consultant John Hurt in a recent Monitor podcast said equipment leasing companies that were early adopters of digital technology solutions and weren’t reliant on paper have adapted more quickly to working remotely during the Covid-19 pandemic. The coronavirus and subsequent stay-at-home orders quickly illuminated sizeable gaps in equipment finance processes and business operations that clearly needed to be more mobile and flexible.

“The ability to get at your data and your work product regardless of where you are located, is critical,” says Hurt. “It varies by job function, but digital contracts, billing, and files that you can reach from home make a big difference now.”

Where are the most noticeable gaps? Systems that provide flexibility for rebooking and mid-term changes tend to be asset-based systems as they enable quicker restructures, says Hurt. “You can suspend some items and keep the yield or payment the same and continue servicing. But with contract-based systems, you’d typically have to terminate the contract and then re-book it. Such a functional leg up allows you to adjust much more elegantly and swiftly. The trade-off is in the booking, where you must enter all of the asset information.

“Customers requesting restructures, skip payments and other adjustments to their contract are stressing some of the older platforms. Part of what we saw during the pandemic shutdown was accounting staff still going in to process paper.”

The overarching goal should be clear, he adds: “We have to be ‘digital first’ and that includes having cloud or software-as-a-service (SaaS) operations where you pay for a seat and login via a browser instead of a perpetual license on your own servers.” But, he says most systems in our industry are still on-premise. It’s the way legacy systems were delivered until about five years ago. In addition, using digital contracts, electronic signature, electronic bill presentment / ACH payments eliminate the need to scan paper.

What has been the delay in digital adoption? “Someone once told me ‘changing systems is like a heart and lung transplant while you are still running a marathon’ and the risk is extremely high,” says Hurt. “Much of the complexity in the IT systems comes from the variety of ways people do leasing; vertical markets have a lot of differing requirements. A system ideal for auto leasing may not work well for a general equipment finance company, for example. He also notes that companies with very robust core platforms will still need to integrate 15-20 ancillary applications, so it is important to select a system with open application interface (API).

For companies still using on-premise systems in this pandemic period, they would have to rely on their internal IT groups to create and manage secure portals to allow people access to system data and files. However, if the source data is paper, someone initially has to digitize it.  Some companies are simply rotating people into the offices for continuity’s sake, he said.

Beyond the pandemic, Hurt anticipates the following trends will prevail:

  • More mid-term flexibility for contract adjustments. This likely means asset-based systems rather than contract-based programs will be in demand for the reasons noted above.
  • Customers will be seeking alternatives to owning equipment and will re-assess how they acquire equipment to preserve cash; a lot of people are asking for relief from their contracts, but as business ramps up they may think differently about the assets they use and will consider sharing equipment or paying only for when it is being used. This may lead to more managed services for usage-based financing.
  • Sale-leasebacks are gaining renewed interest because they enable one to extract operating capital from assets that don’t need to be owned.
  • The shift to working from home will prove attractive in some cases; more employees may continue working remotely well beyond the immediate coronavirus crisis.

The challenges of remote work will need to be addressed and this is far more intricate than simply providing a laptop, Hurt says. Security and access rights need to be developed for users outside the corporate infrastructure. The decision on whether to allow non-branded equipment usage remotely can have serious security consequences. Cloud-delivered applications make this somewhat easier.

Electronic approval processes supported by Business Rules Engines (BRE) need to replace paper sign-offs.  Many CRM and ERP platforms have this type of functionality built in, but it is often not deployed because of resistance to the electronic model. Electronic document execution is an essential component of this approval process.

Speaking to several technology executives who are dealing with this now, a “one size fits all” approach is not working, Hurt notes. The job requirements of a credit analyst vs. an asset manager vs. an accountant will drive a wide range of functional and data access requirements.  A simple laptop and data line that are used by sales executives (the typical remote users) are insufficient to support the activities of users who traditionally partner with other groups in person.

Platforms to support video conferencing and document collaboration are a minimum starting point. This is a great opportunity to push many of these concepts and technologies that have had slow adoption in the past.

The Alta Group helps companies make system selections and plan for digital transformation but right now, says Hurt, many companies are dealing with a short-term “disaster recovery” type of situation; when they get beyond that, more technology investment is anticipated to maintain a more dispersed workforce and gain operational flexibility.

Source:  Monitor Podcast and interview with John Hurt, Director of Alta’s Digital Advisory

 

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Webinar: Leasing in the time of COVID-19 https://thealtagroup.com/webinar-leasing-in-the-time-of-covid-19/ https://thealtagroup.com/webinar-leasing-in-the-time-of-covid-19/#respond Tue, 26 May 2020 21:52:49 +0000 https://thealtagroup.com/?p=9939 COVID-19 Resources and Industry Updates Alta’s LAR and Invigors EMEA provide their “Leasing in their Time of Covid-19” YouTube recording on Alta’s new Covid-19 Resource page and offer advice on how to adapt to the changing conditions and identify the opportunities that will emerge. UPCOMING WEBINARS https://thealtawebinars.com/

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COVID-19 Resources and Industry Updates

Alta’s LAR and Invigors EMEA provide their “Leasing in their Time of Covid-19” YouTube recording on Alta’s new Covid-19 Resource page and offer advice on how to adapt to the changing conditions and identify the opportunities that will emerge.

UPCOMING WEBINARS

https://thealtawebinars.com/

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Strong Interest in M&A Activity Continues as Japanese Investment Remains Active https://thealtagroup.com/monitorreprintjacksonmarapr20-2/ https://thealtagroup.com/monitorreprintjacksonmarapr20-2/#respond Wed, 13 May 2020 23:28:31 +0000 https://thealtagroup.com/?p=9909 The latest on M&As in the equipment finance industry was featured in the Monitor Column, Raising the Bar, by Jim Jackson, March/April 2020 2019 marked another active year of mergers and acquisitions for the equipment leasing and finance industry. The Alta Group anticipates that these trends will continue throughout 2020, as buyers look for opportunities […]

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The latest on M&As in the equipment finance industry was featured in the Monitor Column, Raising the Bar, by Jim Jackson, March/April 2020

2019 marked another active year of mergers and acquisitions for the equipment leasing and finance industry. The Alta Group anticipates that these trends will continue throughout 2020, as buyers look for opportunities to put capital to work and the number of sizable independent leasing companies continues to shrink.

Download the newsletter (PDF) here

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Advice for US Equipment Finance Business on Coronavirus Impacts https://thealtagroup.com/advice-for-us-equipment-finance-business-on-coronavirus-impacts/ https://thealtagroup.com/advice-for-us-equipment-finance-business-on-coronavirus-impacts/#respond Thu, 09 Apr 2020 13:46:57 +0000 https://thealtagroup.com/?p=9679   Comparisons with past events like the Great Recession fall short in describing what equipment finance businesses in the US are experiencing as a result of the COVID-19 pandemic. To provide reliable insights and advice to the industry, consultants with The Alta Group recently developed an article for Equipment Finance Advisor that discusses initial impacts […]

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Comparisons with past events like the Great Recession fall short in describing what equipment finance businesses in the US are experiencing as a result of the COVID-19 pandemic. To provide reliable insights and advice to the industry, consultants with The Alta Group recently developed an article for Equipment Finance Advisor that discusses initial impacts as well as short term and longer term implications. 

The article acknowledges that equipment finance portfolio restructurings are underway, estimated at 25-30%, but the situation is fluid. In fact, there may be more restructurings than even anticipated.  

Equipment manufacturers and their innovative financing partners are stepping up to the challenge. The consultants  advise all captives to keep their manufacturing parents close so they can anticipate shortages and pricing changes. 

Alta consultants who contributed to the article also focused on developments in the fintech sector, including negative fallout but also two business models poised for growth. They described current constraints on mergers and acquisitions; future M&A opportunities; fluctuating equipment valuations and other asset management implications, such as the increased propensity for customers to renew at end of term; and the information technology requirements of remote work.

Additional advice in the article includes a reminder to reach out to customers proactively and spread goodwill as much as possible, but to do so with an objective action plan in place. The consultants also recommend stepping up due diligence and cybersecurity efforts to combat bad actors taking advantage of the situation; and, longer term, supporting pandemic-friendly equipment such as robots, cobots and drones, as well as usage-based flexible payment models – already a trend in the industry – to help businesses through difficult times. 

We invite you to read the full article here featuring the insights and recommendations of Valerie L. Gerard, James Jackson, Carl Chrappa, Paul Bent, David Wiener, Diane Croessmann, Andrew Mesches, John Hurt and Patricia Voorhees.

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