Future Outlook for Commercial Equipment Leasing & Financing Industry
Activity in the commercial equipment leasing and finance industry is robust, as capital expenditures for essential equipment continues to expand, especially for small and medium sized business. For several years, the majority of equipment acquisitions were mainly for the replacement of older equipment. However, the tide has turned and executive teams, owners, and investors are acquiring equipment to move forward, expand, gain efficiencies, and better position themselves for 2020 and beyond. Decision makers are acquiring equipment to increase profitability, to reduce maintenance expenses, and to be more reliable participants in their target industries.
Financial Solutions for Businesses
Cash is king – especially for growing and prosperous companies. The commercial equipment leasing and finance industry’s primary function is to provide cash flow benefits for businesses acquiring essential, long-term equipment assets. Usually, the structures provided by the leasing and finance community require low upfront payments, fixed monthly payments, and multiple end-of-term options to facilitate the customer’s long-term cash planning and management. For many decades, the industry has supplied creative structures and alternative financing plans to support large and small businesses with the needed cash to reach the next level of corporate success. The industry continues to change and react to the current needs of corporate clients. There are financial solutions for every business, and the process of finding the “right” financial partner for the long term is an essential business activity for every size business.
Lessons Learned from the 2008 Financial Crisis
One of the most enduring lessons learned from the 2008 downturn is that business owners and managers need to build financial partnerships during the more financially well-off times to ensure cash availability during the lean times. Savvy businesses are in the process of securing strong relationships with banks and non-bank providers of capital. The commercial equipment leasing and financing industry is experiencing a significant increase in new relationships. These relationships are important for current cash flow needs and long-term access of capital.
Finding the Right Financial Partner
Vendors and end-users are requiring their financial partners to provide more than equipment financing; they are demanding a better buying experience. Top originators and organizations are providing equipment expertise, industry expertise, and are developing financing programs to match the specific needs of their clients. The delivery platforms for commercial equipment financing are becoming faster, more efficient, and innovative. The process is generally easiest when the client aligns itself with the “right” financial partner that understands its business and equipment needs, as well as the anticipated future trends of the client’s industry.
Not all transactions are created equal nor is every financial partner. Well-versed vendors and end-users alike take the time and effort to build deep relationships with their financing partners. They fully understand their financial partners’ credit criteria, structure capabilities, and flexibility. The “right” financial partner is fully understood and appreciated. Vendors and end-users should be encouraged to have multiple contacts within the financial partner (sales representative, credit department, management team, and portfolio managers). Vendors and end-users represent valuable partners that educate finance and leasing companies on a daily basis. The best relationships between vendors/end-users and financial partners are two-way streets and are mutually beneficial for all parties.
