technology & operations€¦ · lizing the company’s aspire product. leaseteam provides...

inside this issue:It Pays to be tech savvy

Four c’s oF LeasIng as a bank

PortFoLIo ManageMent—It’s aLL In the DetaILs

technoLogy anD the broker

newslineNational Equipment Finance Association

july/august 2014Vol. 6, No. 4

technoLogy & oPeratIons

2 newsLIne | JULY/AUGUST 2014

NEFA HEAdquArtErsP.O. Box 69Northbrook, IL 60065-0069847-380-5050 main847-380-5055 [email protected]

ExEcutiVE dirEctorGerry [email protected]

sENior AssociAtioN coordiNAtorKim [email protected]

NEwsliNE EditorChelsea [email protected]

AdVErtisiNg sAlEsLisa [email protected]

dEsigN & ProductioNR&W Publishing Associates3534 Caley RoadNewtown Square, PA [email protected]

NEFA Newsline ©2014 is published by the National Equipment Finance Association. All rights reserved. All opinions expressed in the articles, analysis, interpretations, etc. within this publication are solely those of the individual. For editorial information, please contact Chelsea Kirtley at 727-450-9870.

newsline

contentsjuly/August 2014 • Vol. 6, No. 4

7

7 it PAys to bE tEcH sAVVy By Randy Haug

10 Four c’s oF lEAsiNg As A bANk By Daryn Lecy

15 PortFolio MANAgEMENt – it’s All iN tHE dEtAils By Nancy Geary

19 tEcHNology ANd tHE brokEr By Susana Saja

DePartMents

9 PersonaL line witH jiM MErrilEEs, clP

21 NEFA tidbits

22 LegaL line ArNold brEsslEr

it PAys to bE tEcH sAVVy

10

newsLIne | JULY/AUGUST 2014 3

executIve coMMIttee

PrEsidENt kylE gilliAM, clPARvEST EqUIPmENT FINANCE

VicE PrEsidENt tArA AAsANd LEASETEAm, INC.

trEAsurEr dAVid NorMANdiN, clPBANC OF CALIFORNIA

sEcrEtAry gAry souVErEiN PAWNEE LEASING CORPORATION

iMMEdiAtE PAst-PrEsidENt joHN rosENluNd, clP PORTFOLIO FINANCIAL SERvICING COmPANY

boarD oF DIrectors

MikE cooN LCA FINANCIAL, INC.

dENNis drEsslEr DRESSLER & PETERS, LLC

ANNA-MAry gEist TAxWARE

stEPHANiE HAll BRYN mAWR FUNDING

doug HoulAHAN, clPmAxIm COmmERCIAL CAPITAL, LLC

MArc kEEPMAN KLC FINANCIAL, INC.

jiM MErrilEEs, clP TIP CAPITAL

grEgory NAPPi DDI LEASING, INC.

brucE sMitH, clP DIvERSIFIED CAPITAL CREDIT CORPORATION

diANE williAMs BANKERS LEASING COmPANY

neFa 2014 boarD oF DIrectors

National Equipment Finance Association

lEttEr

From NEFA’s President

remember the alamo.I am very excited about our fall conference this year in San Antonio, Texas! San Antonio is a great venue for NEFA and our guests to gather, fellowship, and share ideas on how to improve ourselves professionally. For those of you who haven’t had the chance to experience the riverwalk, you’re in for quite a treat. There are several different options along the riverwalk for your enjoyment. Many different shopping venues, restaurants, and evening entertainment await you at our next destination. By the way, if you happen to fall into the water, don’t panic; it’s only a few feet deep. I know this from personal experience.

Probably the most notable event in the history of San Antonio is The Battle of the Alamo (February 23 – March 6, 1836). It was a pivotal event in the Texas Revolution. Following a thirteen day siege, Mexican troops under President General Antonio López de Santa Anna launched an assault on the Alamo Mission near San Antonio de Béxar (modern-day San Antonio, Texas, United States). All of the Texan defenders were killed. Santa Anna’s cruelty during the battle inspired many Texans, both Texas settlers and adventurers from the United States, to join the Texan Army. Buoyed by a desire for revenge, the Texans defeated the Mexican Army at the Battle of San Jacinto, on April 21, 1836, ending the revolution.

Another interesting fact is that San Antonio is home to Lackland Air Force Base. It is named after Brigadier General Frank Lackland. It is the only entry processing station for Air Force enlisted Basic Military Training (BMT). It shared this status temporarily with Amarillo Air Force Base during the Vietnam War until Amarillo AFB’s closure in 1968. Lackland AFB hosts a collection of vintage military aircraft on static display on its parade grounds, including a B-52 Stratofortress, F-4 Phantom II, SR-71 Blackbird, C-121 Constellation, B-17 Flying Fortress, and a B-25 Mitchell.

Lackland Air Force Base also served as my temporary home away from home in the summer of 1985. As a young seventeen year old Airman, I spent that summer getting an attitude adjustment and quickly understanding that I better align my way of think-ing with the Air Force’s way or this might not be a good summer. I still have many fond memories of “Happy Valley” and continue to maintain friendships with a few of the Airmen that I served with that summer (29) years ago.

As always, the agenda will be full of beneficial topics that will provide us with knowl-edge to carry back to our offices. On that note, it’s up to each of us to apply that wisdom to our day to day operations. This meeting will serve as our annual business meeting. If at all possible, we need all members to be in attendance as we plan for the future of the National Equipment Finance Association and its new leadership for 2015.

Kyle W. Gilliam, CLPPresident/CEO

Arvest Equipment Finance

kyle w. gilliam, cLPPresident/CEOArvest Equipment Finance


lEttEr

From NEFA’s Executive director

almost everyone I’ve called today is unavailable, and a whole bunch of emails I sent came back with auto-responder messages saying the person they were intended for was out for vacation.

Such are the joys of working during the summer’s popular vacation weeks.

It really doesn’t bother me very much though, because I very much understand the need for removal and renewal time from work. I certainly don’t begrudge any of our members or suppliers time off for their vacations. Time away from work with family and friends, whether it’s at the beach, in the mountains or just home working in the yard, is an integral part of our work life and our businesses because it helps us maintain perspective.

When we stop to rest, we rejuvenate ourselves naturally, and when we remove ourselves from our work we’re able to look at it with refreshed thinking and imagination. In our industry, with its complex relationships, intricate documentation, and ever changing rules and regulations, the myriad of details we deal with and the speed with which we need to deal with them can some-times, as the old saying goes, make us lose sight of the forest for the trees.

It’s important that our business ideas have the same opportunity to rejuvenate, refresh, and gain perspective that our bodies do. Savvy members see our conferences in that way. In much the same way that they see a week at the beach or at the lake with their families as personal rejuvenation, they see getting away to a conference and spending time with other professionals as a way to give their business ideas some time off and to refresh them.

They come to a conference with an open mind, removing themselves mentally from a strict adherence to things they decided to do in the past, and they welcome and embrace different ideas and strategies. This allows them to look at the whole forest and, quite frequently, find a better way to work in it.

In just the way that your personal vacation is an investment in yourself, participation in our NEFA conferences, like our upcom-ing Funding Symposium, is the same kind of investment in your business.

Now, I want to talk about promoting those conferences a little bit, and I want to thank you for your help and patience when we do so.

You probably hear about the details of most of our conferences and other events by email. As a small non-profit association, I spend your association’s money very frugally and in ways that allow me to reach the greatest number of members and non-mem-bers with NEFA’s messages. Email is, without a doubt, the most cost-effective way of doing that, and so we use a lot of email.

Why do we use so much? We have a lot of events. That’s good news! NEFA’s doing very well right now, and members all over the country are volunteering to organize a wide variety of events. It’s incumbent on me, in order to give maximum leverage to their efforts, to spread the word about those events as much as I can. And, quite frankly, we see very clearly that for most people, it takes repeated reminders to get them to act and register for events.

Virtually all of our emails give you the opportunity to ‘opt-out’ of receiving them. We try very hard to give our emails variety and make them fun and interesting and, as a result, we have an extremely low percentage of people that do opt-out; it’s usually because they’re no longer active in the business.

Now, individually, you may want to opt-out of receiving emails about one type of event but still receive emails about others. To help you with that, we organize our emails into a variety of different email lists, and when you click to opt-out, you’re given the opportunity to decide which lists you want to receive emails from and which ones you don’t.

gerry eganExecutive Director

Continued on page 23


InDustry news

bEAcoN APPlAuds EquiPMENt FiNANciNg cliENtsAs part of Success Spotlight, a new customer appreciation pro-gram, Beacon Funding recognized Safari Towing & Recovery in McKinney, TX, for utilizing equipment financing to advance its business growth. Safari Towing & Recovery is the inaugural par-ticipant in the Success Spotlight program. Only five years ago, the company had just a few employees and one truck. Now, the family business has 24 employees and 12 trucks. Seven of those trucks were acquired within the last two years thanks to Beacon’s truck financing programs. The program highlights best practices and provides real-life examples of how equipment financing can foster business growth.

lEAsEtEAM ANNouNcEs PArtNErsHiP witH iVory coNsultiNgLeaseTeam announced a partnership with Ivory Consulting, uti-lizing the company’s ASPIRE product. LeaseTeam provides soft-ware, support, training and strategic consulting services to more than 250 financial organizations throughout North America. Ivory Consulting provides equipment lease and loan pricing soft-ware and consulting services for the equipment finance industry.

buFFAlo, Ny is NEw HoME oF bluE bridgE FiNANciAlGovernor Andrew M. Cuomo announced that Blue Bridge Financial will establish its headquarters in the historic Electric Tower in Buffalo’s central business district. Blue Bridge Financial will retain 12 jobs in Western New York while creating 71 new jobs over a five year period. New York State’s incentive proposal made the company’s move into an initial space of 5,500 square feet in the iconic Electric Tower possible. The company qualified for up to $586,173 in performance-based Excelsior Jobs Program tax credits from Empire State Development, the state’s economic development agency, in return for its proposed investment and job creation commitments. Significant contributors to the incen-tive package and the relocation included the Buffalo Niagara Enterprise and the CBRE|Buffalo Office brokerage team.

FAsb issuEs NEw rEPurcHAsE AgrEEMENt stANdArdThe Financial Accounting Standards Board (FASB) issued a new standard to improve the financial reporting of repurchase agree-ments and other similar transactions. Accounting Standards Update No. 2014-11, Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures, changes the accounting for repurchase-to-matu-rity transactions and repurchase financing arrangements. It also requires enhanced disclosures about repurchase agreements and other similar transactions. To view the full FASB release, visit: http://www.businesswire.com/news/home/20140612006166/en/FASB-Improves-Financial-Reporting-Repurchase-Agreements#.U8vfxI1dXpV

sMAll busiNEss oPtiMisM HigHEst siNcE 2007The most recent National Federation of Independent Business Optimism Index rose by 1.4 points in May, hitting a new total of

Members on the MoveNational Equipment Finance Association


http://www.bfec.com

http://www.GAIG.com/equipmentinsurance


96.6, the highest point seen in the market since September 2007, a Marlin business report stated. Recent surveys find that as 2014 hits its halfway point, there are plen-ty of signs that the current climate is stron-ger than ever. This faith has led to new levels of investment. Up to 27% of small business leaders want to make new pur-chases of capital equipment by December, which is more than double the amount who reported similar sentiments in 2013. To view the full Marlin report, visit:

http://mediaroom.marlinfinance.com/small-business-news/small-business-opti-mism-only-rising-further/

AMErisourcE closEs FAcility For drilliNg sErVicEs ProVidErAmerisource announced the closing and funding of a $500,000 credit facility for an oilfield drilling and construction servic-es firm based in Minnesota. Amerisource said the proceeds of the facility were used to cover payroll and provide addi-tional working capital to support contin-ued growth through the company’s busy season.

diVErsiFiEd ProVidEs FiNANciNg For 75 truck coMPANyDiversified Transportation Finance announced their latest client acquisition. Kentucky-based 75 Truck Company hauls for steel plants and is seeing significant growth. The company has been in busi-ness over 20 years and recently had an ownership change. Diversified was able to structure an A/R financing Line to take advantage of their solid accounts receiv-able and fund their immediate needs to implement a new enterprise and dispatch system, as well as give them a product they could utilize in the future. The line allows them to manage their cash flow needs based on what is happening in their business.

AscENtiuM ANNouNcEs 57% q2/14 FiNANciNg VoluME growtH y/yAscentium Capital announced record gains during second quarter 2014. Over the same period last year, the company

obtained 57% growth in financing vol-ume. Additionally, Ascentium Capital’s new business volume has the company ranked higher, in position 62 (up from 70) on the Monitor 100 list, which classifies the largest equipment leasing and financ-ing companies in the U.S.

bluE bridgE oPENs sc busiNEss dEVEloPMENt oFFicEBlue Bridge Financial announced the opening of a business development office in Lake Wylie, South Carolina. Accompanying the office opening is the addition of equipment finance industry veteran Crystal Murcha as assistant vice president of Broker Relations. Crystal brings over seven years of industry experi-ence with third party origination sources, most recently with Axis Capital. Working in tandem with Renee Hazard, vice presi-dent of Broker Relations in Buffalo, they will oversee the business development division with a focus on independent third party originator loan relations. Supporting Crystal in the South Carolina office are Jenny Myers and Samantha Furtick as bro-ker relations assistants. The opening of a South Carolina presence supplements the existing Blue Bridge physical locations in Buffalo, New York; Palm Harbor, Florida and San Francisco, California. Along with the opening, the three staff additions com-plement recent hires in core operational functions, including loan underwriting, documentation and finance. Blue Bridge’s employee count sits at 28 after these hires.

bostoN FiNANciAl & Equity closEs lEAsEBoston Financial & Equity closed a lease with an emerging growth company in California. This six-year-old company has recently received a series B round of $13 million. The company developed a new tactile user interface for touchscreen devices. The equipment leased will be used for R&D purposes and includes a plasma etching system, a CNC milling machine and a Laser.

tAb bANk ProVidEs $15.6MM iN q2/14 truckiNg EquiPMENt loANsTAB Bank provided $15.6 million in trucking equipment loans for 17 trans-portation companies during Q2/14. Based in different regions of the country, these companies represent a broad spectrum of trucking entities including one-truck own-er-operators and small and large fleets.

PersonneL

jAcob cutlEr joiNs diVErsiFiEd As sENior AccouNt MANAgErJacob has returned to the U.S. from the UK where he had a 5 year career in leas-ing, spanning a wide variety of hard assets, with a focus on technology and medical. His most recent position was with the Commonwealth Bank of Australia based in London, supporting life cycle manage-ment of assets. Jacob will be responsible for the development of target markets, with a focus on the medical industry through its Health Care Equipment Funding division.

bluE bridgE FiNANciAl wElcoMEs AdditioNs to crEdit tEAMMatthew Bona joins Blue Bridge Financial as credit manager and brings more than seven years of experience within the industry. He will oversee credit deci-sions for small business borrowers. Matthew will also oversee members of the credit analysis team. Most recently as account manager with Westlake Financial Services, Matthew also gained experience as a portfolio manager at M&T Bank and as a tax consultant at Tax Technologies.

Also joining Blue Bridge Financial as credit analyst is Michael Pesono. He will focus on small business credit analysis and underwriting, including direct cor-respondence with borrowers, customers and loan originators. Prior to joining Blue Bridge, Michael was part of the game pre-sentation and special events team with the Buffalo Sabres. •

Members on the MoveNational Equipment Finance Association



I will focus my comments on 3 main areas, with the timeframe being the next 18-36 months on a forward looking basis.

• The use of emerging technology in the origination channels, both for indirect, direct, and vendor or dealer or captive related finance sectors.

• The emerging use of technology in the lessor-broker, lessor, and funder segments (both institutional and non-institutional markets) that allows for complete management of the lifecycle of an equipment finance transaction. What I will describe as the “End 2 End” Technology solution.

• The emerging role of innovation, thought leadership, and the require-ment of “human resources technology capital” (HRTC) for your organization.

emerging technology in the origination channelProbably one of the biggest areas of adop-tion is, and will continue to be, the role of Sales Relationship Management (SRM) and Customer Relationship Management (CRM) tools. The Equipment Finance Industry has, for many years, adopted various types of sales tools. I refer to them as legacy Sales Relationship Management tools—tools, configured or designed spe-cifically to help manage the many steps in the sales origination process. From ACT, to Goldmine, Contact Management to Microsoft Outlook, to a variety of other low-cost solutions that are fairly easy to use. These type legacy (SRM) tools with various levels of configurability, sophisti-cation, and functionality have had a vari-ety of uses as robust email systems and (SRM) systems with varying levels of use

Recently, I was asked to comment on the use of technology as it pertains to the Equipment Finance marketplace, and what innovation or emerging technology will have the greatest impact. That is a very interesting concept to consider as you think about the very fragmented equipment finance marketplace.

by rANdy HAug

It Pays to be tech savvy

tEcHNology & oPErAtioNs

8 newsLIne | mAY/JUNE 2014

the emerging technology of the Lifecycle solution Today’s sophisticated complete lifecycle management solutions allow you to track deals through the entire lifecycle of a trans-action. They give you information at your fingertips to better allow you to manage your origination business through credit, documentation, syndication, servicing, and end of term. These solutions provide you with a complete view at any time of a lead, opportunity or funded— or even a disposed—contract. This is what I call a “true customer relationship management solution” (CRM). Typically, these are sin-gle database solutions, utilizing the latest technology, which can be run internally or externally via the internet or on the cloud. They allow for access anywhere, at any time, by almost any technology platform. For those that are originating, discount-ing, and/or servicing portfolios, there is no better or more integrated technology avail-able today. These systems are designed specifically for the equipment finance professionals who know industry best practices very well. Also, these End 2 End, lifecycle solutions are available in a variety of different models. Software as a Service (SaaS)/Cloud Based, as well as traditional licensed models (in-house on premise) solutions. These solutions use the latest technology, and when paired with some of the best industry human resource tech-nology capital (HRTC), provide powerful, flexible, and configurable, high productiv-ity solutions with workflow, and auto-mation processes, all customized to your specific company’s needs. These solutions fit the profile of equipment finance organi-zations that want to grow their business in the most cost effective way, with partner-ship from a trusted solution provider over the long-term. Beyond increased produc-tivity, improved efficiency, and creating a platform for business growth, they can also be a key differentiator as you look to monetize your company investment through a successful future sale, merger or an ability to raise capital to continue to grow your business.

the emerging requirement of technology savvy human capital resources within the core Management group of the equipment Finance enterpriseIf there is anything that is really emerging as a need within the Equipment Finance ecosystem today, it is the need for technol-ogy savvy human capital. To help deploy the sophisticated solutions and technology

and success across the sales and origina-tion enterprises of broker, broker-lessor, captive, and funding source landscape. These tools, however, are starting to be replaced by much more sophisticated and configurable solutions like SalesForce.com, Microsoft CRM, Saleslogix, and a variety of industry specific CRM tools that work within an organization. Though not designed solely for the equip-ment finance industry, they can be con-figured for specific businesses, who either have the technology skillset on staff or who are willing to hire technology-based outsource consultants or programmers. Please note, this is not a one-time cost; it is something that will need to be man-aged, updated, and maintained for suc-cessful use. These (CRM) tools will need a longer-term investment because of the iterative nature of designing, testing, and putting these tools in place, and then con-tinuing to tweak and re 71014PCO-PC configure them for maximum use and fit for your organization. These CRM tools have a lot of functionality and robust features. I have personally seen some out-standing systems created this way; but do not underestimate the investment, and your own staff investment of time and resources for this type of solution.

The real question is, “Who within your organization can configure and assist in designing business processes that match your specific needs?” If you have a talent-ed person or group that has time to dedi-cate to this, you are in great shape, and should strongly consider moving to, and deploying, these solutions. If you don’t, you should strongly consider outsourcing this work to a consultant who has very strong equipment finance industry knowl-edge and can work with your people and business leaders to get this system set up and functional and get your users trained. Most importantly, make sure that some-one can transfer this knowledge to you, so that you can continue to configure your own system in the future as things change. There really is no short cut to this, and a lot of thought and iterative improvements must be made to get your origination plat-form in place and improving your ability to scale your business in a cost effective and productive way. Also, do not try to buy a solution that cannot easily be con-figured or changed by either you or your consulting business partner in a very fast and cost effective way. Not having the ability to do so may end up being a les-son in futility, and could very well be an expensive solution for you in the long-run.


About tHE AutHor

randy haug is Senior vice President and Co-Founder of LeaseTeam, Inc. He has 27 years of experience in the leasing and equipment finance industry. He started his career in 1984 with Lease Solutions, as a division sales manager.

In January of 1989, Randy co-founded LeaseTeam, Inc. He is one of the founding members of NEFA, and in 2010, Randy served as NEFA president. Randy currently serves as a Trustee for the Equipment Lease and Finance Foundation, and is a Trustee for the Chris Walker Education Fund that raises money for educational endeavors that advance professionalism for members of the industry. He has also served as a committee member, a panelist, and an industry speaker, and has published numerous articles for NEFA, ELFA, and CFLA. He can be reached by phone at 800-531-5086 x 1014 or by email at [email protected].

required and suggested above, forward-thinking equipment finance companies are including these technology and industry experienced “thought leaders” in their management teams or hiring trusted and experienced industry consultants to assist them in these matters. Many internal resources have titles like Strategic Product or Technology Managers, Directors of IT, as well as Directors of Finance and Technology. They direct the evaluation and use of these technology solutions within their organization. They play a key role in deploying and in becoming con-figuration “super users” and advocates of these products and services. Many com-panies have taken, or are considering tak-ing, people from their Operations (Credit, Finance, and IT) areas and developing them into these types of key managers. For those not able to consider these type of staffing additions, they are working closely with their solution and technology partners to create and bring this thinking and technology “thought leadership” to be shared within their organization. You will see a greater urgency to identify these types of resources in the near future, if you haven’t already. There should be a great deal of thought and consideration given to creating, and protecting your investment in, technology solutions. The equipment finance industry will continue to grow and build on platforms of innovation, service, people, and the use of advanced technology. The role of innovative change leaders in our industry and organizations is already being recognized as a valuable asset that can be monetized today and in the future. •

mailto:[email protected]


PErsoNAl lineVicE PrEsidENt, sPEciAlty MArkEts grouP At tiP cAPitAl

Jim Merrilees, CLP

I am kind of a conservative guy, maybe even boring at times. That’s probably because I started my career as a credit man-ager. Just kidding! I don’t want to offend all those NEFA members in the credit departments across the country. After

all, I have been in the equipment finance business since 1973. Although, some of our conferences have been anything but bor-ing, right?

Conservative nature aside, one thing I have always liked is motor-cycles, and of course, riding motorcycles. I got my first “bike” when I was in college. To some, it is a dangerous proposition. To me, it provides a unique method of relaxation, with the bonus of traveling and seeing things more clearly. Until we can figure out how to “beam” people to various locations, for me, it is one of the most fascinating ways to move about. Even if we could be in an episode of Star Trek, I am unsure of what the scenery, if any, would be.

Returning WW II veterans helped boost the popularity of motor-cycles, and maybe, some even gave it a bad reputation. In either case, motorcycle riding has seen its ups and downs, just like most everything else. Initial baby boomers born in the 40’s and 50’s helped spur a renaissance of motorcycle riding (particularly, the larger touring models) in the last two decades.

As early as eight years old, I envied the older kids with scoot-ers and motorcycles. Some would show up at baseball practice with their spikes and gloves hanging from the handlebars. At that time, hardly anyone wore helmets. Have any of you ever heard of an Allstate scooter? It was sold by Sears. A neighbor of mine rode one of the first Harley-Davidson Sportsters onto the playground at school where we were playing basketball. I was full of envy. That was 1957.

One of my most memorable trips was riding to an outdoor con-cert in southern Illinois, Bulls Island. It was post-Woodstock. I actually slept on the bike. Later in life, I rode from Oregon to Milwaukee, WI to the 105th Harley-Davidson anniversary. This time, only hotels provided a good night’s sleep.

Since that first “bike” in college, I have rarely been without some sort of two-wheeled motorized transportation. In the 1980’s, I lived in Costa Mesa, CA. I had a motorcycle and two Honda scooters. I purchased them from Tustin Honda for $248.00 each! Even then, that was cheaper than many bicycles. That was a great way to go to the beach, and parking was a breeze. If you chose to, you could split lanes; those of you in California know what this means!

The same year I was a senior in college, the movie “On Any Sunday” came out. It is an interesting documentary about the sport of motorcycling. It even has Steve McQueen in it. I enjoy all types of riding, but mostly stick with on-road versus off-road, which the movie covers.

I bought a dirt bike for my son when he was ten years old. He still enjoys riding and currently owns three motorcycles. He lives in Windsor, CA. The first thing I did with my wife was take her on a ride. We went to White Castle, and she still married me years later!

As I write this on June 19, 2014, Harley-Davidson just intro-duced their first electric bike. It’s not yet for sale, and many of the old guys may not like it. But like all businesses, Harley-Davidson must evolve. Our industry has a great history, with many features of the past, but you can’t say we haven’t had changes throughout the decades. It is inevitable. Motorcycles provide a great meta-phor for life. We know change is coming, even as we resist it; and sometimes we like to live in the past. Motorcycles have a way of representing the past, but incorporating many new fea-tures and technologies, without our immediate recognition. If you pay close attention, you will notice these changes. The casual observer will not. Harley is great at this. The new bikes present themselves as the same, year over year, with subtle differences. That is one reason they are so popular. It lets us live a little in the past, with the convenience of new comfort and reliability, most importantly, improving on the experience. Am I ready for an electric motorcycle? Maybe not today, but I wouldn’t count it out. Hey, when I started in the industry we had books with rate factors. Calculators and software just made the experience simpler and more efficient.

So you might say I have been riding just a little longer than I have been in the equipment leasing/finance business. When you see me, please don’t tell me stories about a person you know who had a bad….. Just say, “Have a nice ride, and be safe, Jim.”

See you in San Antonio. Maybe I’ll just ride down to see you. •

have a nIce rIDe, anD be saFe!

10 newsLIne | JULY/AUGUST 2014 UNE 2014

The word is out: equipment leasing and finance can be good business! Years removed from a recession, some reports state the economy is starting to pick up steam, and indus-try confidence is up, while interest rates remain at historic

lows. Historic low yields paired with lagging demand for traditional C&I bank loans has led many more community banks down the path of adding equipment leasing and finance contracts to their asset mix. Some banks are doing so in the same form they have in the past, pur-chasing small pools of leases with servicing retained by the originator, which is a great way to dip their toes in the water. Other banks are going beyond the ‘toe dip’ to ‘dive’ right into the Equipment financing industry by forming actual bank-owned equipment finance or leasing divisions or subsidiaries. Option two, as you would imagine, requires much more consideration in order to keep your head above water

Once you learn the 4, or some would say 5, C’s of Credit, you remember them, and because my roots in this industry started at the credit department, I thought it would be appropriate to use the 4 C’s of leasing for a community bank considering leasing.

by dAryN lEcy

Four c’s of Leasing as a bank



(after the initial dive, that is). It is not the intent of this article to regurgitate the findings of the great amount of research that has been done over the last few years in opportunities for com-munity banks in equipment leasing and finance, but rather to comment from inside a bank-owned leasing division on consid-erations that should be made if a bank is to dive into our $827 billion and growing industry.

Once you learn the 4, or some would say 5, C’s of Credit, you remember them, and because my roots in this industry started at the credit department, I thought it would be appropriate to use the 4 C’s of leasing for a community bank considering leasing. Some would say that commitment is a line you cross, and it’s the difference between wishing and doing. Joining an industry that most bankers have little or no experience in is challenging and will require serious commitment at all levels of the bank, from the loan officers, to management, to board members and owners. There will need to be commitment to many major areas: 1) creating new credit policies or revamping them and determining how you will underwrite deals where speed is the need 2) creating a platform for originating trans-actions either directly or indirectly 3) developing commercial loan and lease documents commensurate with industry stan-dards, including appropriate provisions specific to our indus-try, which are much different than in traditional banking 4) determining how to service the portfolio: do it yourself or out-source to one of several very capable companies – there are huge advantages to servicing your own contracts, but how much can you and your employees learn at once? 5) document-ing your steps and reasoning for joining the leasing world so that you can justify them to whatever governmental body regu-lates that bank (FDIC or OCC or both) 6) committing to learn-ing, as there is much to learn about structures, terms, residuals, TRACs, FMV, early payoffs, evergreen clauses, assignments and more. While having equipment leasing and finance assets in a portfolio can be great for profitability and diversification, they come at a large price, lots of work, and commitment to getting the groundwork right. Commitment could be likened to yet another C, Chinese, as in an old Chinese proverb – “talk does not cook rice”. Our bank went beyond the talk to dive into the equipment leasing and finance industry in 1976 by pur-chasing a small leasing company and creating a new division of the bank. The dive was by no means a quick plunge, but rather a very calculated and educated dive. Our CEO, Norm Skalicky, led that venture then, and continues to fully support our divi-sion even after much scrutiny by federal bank examiners over the years. Leasing is more common to examiners now, but in years past, it was seen as a pretty risky venture, mainly because it was different or unknown. Because of our CEO’s continued commitment, and the support of our board, our Equipment Finance Division has enjoyed many years of complimenting and supporting the bank’s products and success.

Credit policy is the second C, as it will be required to change and to account for what will be a different style of under-writing for leasing vs. traditional commercial bank lending. Underwriting will be much different if a bank enters small-tick-et financing vs. large-ticket financing. No matter the ticket size, you will need to familiarize yourself with industry standards for turnaround time, and work to get decisions within that time frame. We play primarily in the small-ticket arena, and

http://www.nefassociation.org/events

http://www.finpac.com

the vast majority of our decisions are han-dled quickly at our divisional level; only for some larger exposure transactions will we work with our bank credit committee. We are fortunate to have a strong rela-tionship with our bank so that the sense of urgency flows to our bank’s credit com-mittee, and turnaround is not an issue, as it may be in some organizations. Without the commitment to, and understand-ing of, the leasing business by organiza-tional leaders, it would be difficult and nearly impossible to operate in middle-ticket or large-ticket markets because of

credit limits and approval authorities. Additionally, there are different report-ing tools available and commonly used by leasing companies that many bankers cur-rently do not use; one such tool is Paynet. Underwriting differences will be necessary to accommodate our industry’s demand for application-only programs, no matter the level required, be it $100k or $500k; both will likely require deviation from a typical bank underwriting policy of get-ting financial statements. Consideration should be given to what industries are being pursued by the new leasing group

and if those industries and assets will require you to utilize asset-based or cash-flow based analysis, and exactly how you make decisions with either option. Additionally, your policy needs to clearly state any reasons you might deviate from policy, and then justify them. Deviations from policy can be considered risky to depositors of the bank, and they need to not only be explained, but also monitored and managed.

Compliance follows closely behind credit policy, although changes to bank compli-ance policy shouldn’t be as drastic, and possibly no changes will be made at all. Keeping in mind the differences between consumer lending and commercial lending compliance regulations, and if the leasing group operates within one or both of those lines, will have a major factor on how or if your bank’s compliance policy can or will be adapted for your leasing group. Strict adherence to compliance policies is essen-tial all the time, but even more so because examiners review your organization as a whole, regarding how the bank complies with regulations, and if the leasing group is not compliant, that could quickly become a problem for the bank parent. The leas-ing group, no matter its size in relation to the bank, will not fly completely under any radar of examining bodies, and more likely, will be more highly scrutinized as a newer venture. Depending on the char-ter location of the bank (federal or state), state licensing may be required for states the leasing group plans to do business in, but this is a complex issue that should be researched through a qualified attorney. We have been proactive and diligent in our compliance efforts and are fortunate to not have had any issues in this area, but I believe compliance is a large consider-ation that may take some time and several experts to help sort out.

Communication, communication, com-munication! Can an industry article be written, or rather, published if the word communication is not mentioned at least once? How many times have we heard that communication is the key to any suc-cessful business? How many times do we fail to remember that, and just go about our business without taking the extra minute to inform a supervisor that you are borrowing an employee for a project or neglect to tell employees what your expec-tations are and continue under assump-tions? Communication takes the greatest


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amount of work to get good at, and even then, we can falter if we are not diligent every day. While we are not perfect, by any means, we believe the communication we have between our division and our bank parent both operationally and stra-tegically is strong, and thus, we are well supported by our bank, and we provide great support in return. Communication, as always, needs to be a two-way street to understand the needs and desires of both parties, because without that, none of the other C’s can be fully implemented. Crucial to any bank’s (or other entity’s) growth is business development efforts, and communication is the main ingredi-ent in order to allow for that cross-selling to happen. Effective communication can lead to great synergy within a bank, in terms of offering their vast product offer-ings to all customers, no matter which avenue they enter the bank’s systems through. Communicating clearly requires listening to customers and visualizing the picture of needs they paint so that either the bank or leasing group can understand, and then suggest, provide, or refer the customer to the appropriate place to satis-fy those needs. Without first having clear communication between the bank and a

leasing division to know what array of products can be offered, and who specifi-cally should discuss those opportunities with a customer, the above is not attain-able. Communication remains key and requires constant commitment and clarity to make it effective! I should’ve tried to get more C’s in that sentence.

Not all can, or will be able to, execute on the C’s in order to ‘dive’ in, and the C’s are not all-encompassing, as much more will come into play. If not prepared for the initial work or what may be even more dif-ficult, the maintenance and management, then the ‘dive’ into equipment leasing may

not be the right move. The fallback can still be the ‘toe-dip’, also requiring care-ful planning and due diligence, but much easier to complete and implement. There are definite benefits to being a part of our challenging, yet highly rewarding indus-try, and either option taken will provide rewards commensurate with risk. While I was not part of our initial ‘dive’ and the extensive work and scrutiny that came with it, I am glad we did it. I can say that, at this point, in my opinion, it is worth the hard work our division, employees, and bank teammates both put in to maintain and manage our relationships. •

About tHE AutHor

Daryn Lecy is vice President of Operations at Stearns Bank N.A. Equipment Finance Division. Daryn is an active member of NEFA and ELFA and has served on industry panels and contributed to industry publications. Stearns Bank N.A. is a nationwide bank headquartered in mN, providing small-ticket equipment financing, SBA loans, and other commercial and consumer loan products. Daryn can be reached by phone at 320-845-2149 or by email at [email protected].

http://www.nefassociation.org


• When booking new leases, be mindful of the ASU 840 (formerly FASB 13) criteria for lease classification. Take into account all of the criteria (not just the 90% test). While the cumulative result of recording a lease transaction will be the same over the life of the lease, direct finance treatment accelerates income, providing more balance sheet equity in the early term of a lease, where operat-ing lease treatment is generally straight line, recognizing income equally over the term. Take the time to properly evaluate and classify lease transactions.

• When setting residuals on FMV leases, be reasonable. Many companies assign little or no residual in transactions where they anticipate a reasonable residual will be collected at end of term. While this may be a conservative approach, it does minimize the lease earnings over the term, recognizing a majority of the earnings at the end of the lease term, when the residual is ultimately col-lected. Why not recognize those earnings over the lease term, providing more balance sheet equity on your financial statements? On the other hand, don’t overstate residuals. The result is overstatement of earnings and equity over the lease term, and significant losses are recognized at lease termination, also not a realistic reflection of the transaction. Be reasonable and thoughtful in assigning residual values to FMV lease transactions.

• Evaluate inventory regularly. When an asset is taken into inventory, it should be taken in at the lower of the current book value or its current market value. Any necessary write-down in value should be taken at the time the asset is taken into inventory. Inventory should then be reevaluated no less than annu-ally (at year end), and any further write-downs taken if the market value has decreased. But inventory is never written up – any anticipated gain in inventory is recognized when the asset is sold.


There are many challenges involved in managing a lease portfolio. Overall, it would appear an easy task; invoice, collect, and account for the transactions. But in reality, there are a lot of details to manage in the process. It is easy to overlook a few details here or there, and some of those oversights could be costly. Following is a list of reminders regarding some important details in lease portfolio management.

by NANcy gEAry

Portfolio Management – It’s all in the Details

Know your sales tax treatment. With so many taxing juris-dictions, and each one following their own set of rules, there are so many details to remember that we can’t even come close to covering them all here. A few important things to note include:

• Upfront sales tax is not always based on the equipment cost. Some states base the tax liability on the total stream of payments to be collected over the lease term. If you are pay-ing sales tax to the vendor and assume you are meeting your sales tax responsibility, you may be exposing your company to liability.

• Watch for assets exempt from sales tax. Be sure the asset fits the specific use of the exemption. Be sure you have the appropriate exemption certificate on file.

• Be aware of local taxing jurisdictions that have taxing and reporting requirements. Not all sales taxes are assessed or remitted at the state level.

• Property tax reporting presents its own set of concerns. In most cases, property taxes are reported and remitted at the county level, so it can get complicated. Some items to note:

• Many companies leave it to their lessee to report assets on $1 out leases for property tax purposes. While this may be working for your company, remember that if the asset is titled in your name, you are ultimately responsible for the taxes. Be sure they are getting paid!

• Many states assess sales tax on personal property taxes that are collected from the lessee. Be sure you know what states have this requirement.

• Remember that property tax is due if you own the asset on the state’s assessment date. It doesn’t matter if you purchased it the day before, or sold it the day after, responsibility falls on whoever is holding the hot potato when the timer stops!

• Remember to address property tax liability at lease termi-nation. The property tax process is lengthy. There’s a good chance you have reported the assets for property tax pur-poses, but haven’t yet been billed for the related tax liability. It is much easier to estimate and collect the tax at lease termi-nation than to go back to the lessee months after the title has been transferred to collect the property tax amount.

• Be aware of your income tax filing responsibilities. This is a big issue for leasing companies. It is extremely important to understand what causes nexus, things like remote offices, employees or leased assets located in another state, which give your business income tax filing responsibilities in that state. Most notably, remember:

• States are getting more technologically savvy; they are now cross-checking between the various taxing bodies within the state for consistency in tax compliance. For example, if you are remitting sales tax, are you, or should you be, filing income/franchise tax returns, property tax returns, etc.

• Most states do not accept the federal bonus depreciation deduction. If you’ve taken advantage of this tax benefit, reporting a federal tax loss doesn’t mean you won’t have taxable income at the state level, once you adjust your depreciation adjustment for the state allowable deduction.

• If you don’t file a return, the statute of limitations never starts to run. States can, and often do, go back more than 3 years once they find you. And if it’s a state with a mini-mum tax (California’s minimum tax is $800), you will have a liability regardless of your reported taxable income in the state. Tack on penalties and interest, and the bal-ance will add up quickly.

• Income is allocated among all of the states where you


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have reporting responsibility. If you report and pay tax on 100% of your income in your home state, and then later have to report to additional states where you should have filed but didn’t, for years beyond the statute (see point above), not only are you paying in that additional state, you won’t be able to claim any refund of overpaid taxes from your home state, since its beyond the statute in your home state. And for those states where you can claim a refund, you’ll have to go through the expense of amending returns to do it, and may need to amend both business and personal returns if your company is an LLC, partnership or S-corporation.

• When working with attorneys, accoun-tants and other professionals, provide all of the facts when seeking an opinion. The quality of the advice you receive is a function of how forthcoming you are with the relevant facts. Many times, we see folks provide just the details they think the professional needs to form the opinion they want to hear. If that’s the case, why spend the money? The opin-ion won’t be based on all of the relevant facts, and may not be accurate. Be sure to provide as much information as you can, and let the professionals decide what they deem to be important.

The above details are just a drop in the bucket when it comes to accurate portfo-lio management. Whether you outsource your businesses portfolio servicing, man-age it all in house, or a combination of both, there is a tremendous amount of detail to track, and a myriad of ever-changing rules to remember. What you don’t know could be costing you much more than you realize! I encourage you to take advantage of the many tools and pro-fessional services available in the industry to protect yourself and your business. •

newsLIne | JULY/AUGUST 2014 17newsLIne | JULY/AUGUST 2014 17

About tHE AutHor

nancy geary, CPA, CLP is a partner at ECS Financial Services, a Certified Public Accounting firm specializing in lease accounting and portfolio management services. Nancy has over thirty years

of public accounting experience. She has been a speaker, panelist, and instructor at numerous lease association functions and classes, has authored articles for various industry publications, and was a contributing author for the CLP Handbook. Nancy has served on numerous association boards and committees within the leasing industry, including UAEL, NEFA, ELFA, and the CLP Foundation, most recently as a member of the CLP Foundation’s Board of Directors since 2013. She can be reached by phone at 847-291-1333 or by email at [email protected].

http://www.ecsfinancial.com

http://www.equipment.bancofcal.com


newsLIne | mAY/JUNE 2014 19

meeting with a customer, forwarding a fax to a funder, pitching another client five minutes before a lunch meeting? This is easily done, if you happen to be lucky enough to have a portable office.

by susANA sAjA

technology and the broker

There is so much to accomplish in a business day, we need technology that helps the process—technology that is not too hard to integrate or learn.

Here are some basic tools that make me more efficient.

For starters, I can do my job from my cell phone. A digital line rings simultaneously, at the office and on the go. Faxes get moved from my phone; no need to come back to the office to move a deal along. I am not sure what I like most, carrying only one cell phone with multiple phone numbers or that I set the phones to only ring during office hours.

We are a Mac based business because Macs don’t crash. That alone is worth the expense. Viruses are designed to attack PCs. So much so, that credit bureaus don’t require antivirus software on Macs. Apple stores are a big plus too. They are fun, full of entrepreneurs, nearby, and have Genius support. With the help of the Apple team, I have taken older files offline, but kept them digital and accessible through multiple computers. I depend on the Apple IT staff since I don’t have my own.

I don’t know much about printers, and I want to keep it that way. So I bought an HP. First, they have what I call the Netflix of ink. I always have a cartridge to refill. I mail back the empty ones and HP refills them. Ink can be expensive, but it doesn’t have to be. The other detail is that I bought it at Costco. If you buy technology at Costco, they give you free support for the life of the product. This keeps me from needing to get to know my printer more than I have to.

When I look back at setting up the home office, I am happy with a few choices I made, but know there is so much more to set up with a growing business. Some days. I have clear plans on how to set up my future office; some days I am so caught up in sales calls. Today, I’m making time for planning—planning my office of tomorrow.

I would love a paperless office with high tech customers and business partners that do everything digitally. But then I remember, I mostly finance trucking equipment;


scott wooDrIng has over 15 years of experi-ence in the commercial equipment finance indus-try. He has held numerous positions including sales, regional and national account management, administration, and pro-gram development. Over the course of his career, he has been instrumental

in helping to create numerous programs for captive leasing companies, lessors, brokers, and regional and national funding sources. In addition, Scott has been actively involved in industry trade associations, serv-ing as Conference Chair for the 2014 NEFA Funding Symposium and as Regional Chair for the midwest Region. He has been married to his wife, Kim, since 1991, and they have two children, Laurel and Connor. In his spare time, Scott enjoys fitness, cooking, ski-ing, and music/movie collecting. He can be reached by phone at 402-493-3433 or by email at [email protected].

voLunteer sPotLIght

aDvertIser InDex

Banc of California, Inc. ....................................................... 17

Boston Financial and Equity Corporation ....................5

ECS Financial Services, Inc. .............................................. 17

Financial Pacific Leasing, Inc. ......................................... 11

Great American Insurance Group ....................................5

Lease Enforcement Attorney Network ........................ 12

Leasing Solutions LLC .......................................................... 16

LeaseTeam, Inc. ...................................................................... 24

merchant Cash and Capital LLC ..................................... 16

National Equipment Finance Association ..........11, 13

About tHE AutHor

susana saja founded Coast Equipment Lending in April of 2012, with her business partner, Lulu Gaviria. Susana started her Equipment Leasing career in 2008, as part of a new role within General Electric. She has an mBA from the University of michigan and is fluent in Spanish and mandarin Chinese. Susana can be reached by phone at 909-743-6041 or by email at [email protected].

my customers are old school. Nonetheless, let’s discuss what this would look like.

Laptop, cell phone, printer, done.So I signed up for a CRM company. It gives me the opportunity to create a customer database that I can share across the company. I know that the value of my company is in my customers. Yet, I tell myself I will use it, but am not using it enough. I still need to train myself to be more efficient. So I spent time researching why I think I should use my CRM more and why I don’t actually take advantage of it.

I really like having my CRM remind me of a deal three months after I last spoke to a customer, deals that did not work out 3 months ago, but should be viable now. In those deals, entering the details of the deals has proved worthwhile. Customers love that I remember them and what we spoke about. Often, these customers were turned down at a few places and feel happy to hear they have a chance. These CRM entries have helped the bottom line.

On the other hand, entering minute details of transactional deals has proved time consuming, with no positive benefit to the bottom line. These deals are better entered on closing. All that is needed is customer contact, opportunity size, win or loss, and when I should call them again. I am learning that I was not using my CRM because I was overusing it. In entering more than needed, I was frustrated with my CRM. I have also noted I am paying for features I am not ready to use, and I am better off downgrading.

I chose my CRM because it integrates with my phone service. If I integrate the two, I can make my calls directly from my CRM, time stamped and all. A couple of notes on the discussion, and I would have a great tracking system of my time. The question there is whether the cost is worth the benefit. In my case, my phone com-pany wants to raise my rate by a multiple of 4 to give me the option to integrate. I don’t believe that will make me 4X the money. If I were a super-broker, coaching others on how to be more successful, that feature could make me money. With just two of us working here, it’s not profitable.

I always want to be more efficient, but I am not always aware of the tools that will help me. I wonder what tools those further along in the evolution use, like, or even hate. At what point are the integra-tion costs worthwhile? Are there different offerings in digital phone companies? How much does the quality vary? To answer these questions and more, I invite you all to share your favorite tech-nology tips and tricks through NEFA’s online discussion forums at http://www.nefassociation.org/. •



MIDwest suMMer eventAugust 7thAl & Alma’s Supper Club Charter CruisesLake minnetonka, mN

socaL angeLs basebaLL networkIng August 7thAngel Stadium of Anaheim, Anaheim, CA

InstItute For LeasIng ProFessIonaLsAugust 8-9th • CLP Exam August 10th • Banc of California, Irvine, CA

InstItute For LeasIng ProFessIonaLsAugust 12-13thFederal Way, WA

chIcago whIte sox basebaLL networkIngAugust 19thU.S Cellular Field, Chicago, IL

2014 FunDIng syMPosIuMSeptember 18-20thHyatt Regency San Antonio RiverwalkSan Antonio, Tx

InstItute For LeasIng ProFessIonaLsOctober 11-12thCLP Exam • October 13thFSG Capital, Inc., Laurel, mD

atLanta ansLey goLF cLub LuncheonOctober 23rdAnsley Golf Club, Atlanta, GA

nJ exPo regIonaLNovember 16-17thTeaneck marriott at Glenpointe, Teaneck, NJ

sPecIaL thank you to our 2014 neFa Partners!

weLcoMe new MeMbers!aLLstate LeasIng BROKER/LESSORus busIness FunDIng BROKER/LESSORwF enterPrIses BROKER/LESSORQuaLIty LeasIng co., Inc. BROKER/LESSORFunDIng cIrcLe FUNDING SOURCEtranscon FInance BROKER/LESSORhIggIns & Dubner SERvICE PROvIDERPresIDentIaL bank FUNDING SOURCE

caLenDar oF events 2014

2014 natIonaL eQuIPMent FInance suMMIt sPonsors to Date:Allegiant Partners • Drink Tickets Co-Sponsor

Allegiant Partners • Prize GiveawayBanc of California • Name Badges

Banc of California • Hotel Room KeysBank of the West • Conference Gift

ECS Financial Services • Drink Tickets Co-SponsorECS Financial Services • Prize Giveaway

Financial Pacific Leasing • Registration PacketsLeaseTeam • Mobile App / Printed Pocket Brochure

Orange Commercial Credit • Friday Refreshment BreaksStearns Bank • Mobile Massage Station

Channel Partners • President’s ReceptionPawnee Leasing • Welcome Reception

Great American Insurance • Ambassador’s ReceptionBusiness Credit Reports • Printed Attendee ListFORA Financial • Friday Networking Luncheon

ECS Financial Services • Conference Email BlastsDakota Financial • Conference Email Blasts

2014 natIonaL eQuIPMent FInance suMMIt exhIbItors to Date:

Amerisource Funding • Bank of the West • Blue Chip Leasing • Boston Financial & Equity CorpBryn Mawr Funding • Business Credit Reports • Channel Partners • CLP Foundation

Collateral Specialists • Conestoga Bank • Dakota Financial • Delta Management GroupECS Financial Services • Financial Pacific Leasing • FORA Financial • Funding Circle

Great American Insurance • LCA Financial • Leasepath • LeaseTeam • MAXIM Commercial CapitalMonitor Daily • NCMIC • North Mill Equipment Finance • OneWorld Business Finance

Orange Commercial Credit • Pawnee Leasing • Quiktrak • RLC Funding • Winston & Winston

PLatInuM Partners:Bank of the WestChannel PartnersECS Financial ServicesLeaseTeamPawnee LeasinggoLD Partners:Banc of CaliforniaFinancial Pacific LeasingGreat American InsuranceStearns Bankbronze Partners:Collateral SpecialistsRTR Services

sILver Partners:Allegiant PartnersArvest Bryn mawr FundingBusiness Credit ReportsDakota FinancialLeasepathmaxim Commercial CapitalNCmICOrange Commercial CreditRLC FundingFORA Financial

tidbitsNational Equipment Finance Association



turn your Lawyer Into a trusted adviserWe live in a highly rules-oriented and litigious society. You have a big investment in your leasing business, which relies heavily on contractual obligations. As a prudent businessperson looking to maximize your business, you would be well advised to secure a trusted legal adviser to help you navigate these issues.

by ArNold brEsslEr

lEgAl line

What is the difference between a lawyer and a trusted legal adviser? A competent lawyer can tell you what the law provides. Unfortunately, that often comes in the form of “on the one hand, this...” and “on the other hand,

that…” or “it depends”. Businesspeople are generally frustrated by this type of discussion. A trusted legal adviser has the knowledge, expertise, and familiarity with the leasing industry, as well as your specific busi-ness, to help you weigh the risks and rewards to reach the right answer for your business.

the First stepThe first step in securing a trusted legal adviser is to seek one out before an acute need arises. Analogizing to a doctor, some people wait until the problem requires a trip to the emergency room. You are likely to get a better result if you have a longstanding relationship with a doctor before an urgent situation arises.

Similarly, the best attorney-client relationships are built over long peri-ods of time.

You should interview several lawyers. As a threshold matter, you want to make sure your lawyer has the necessary expertise to represent your current business needs. The lawyer who does your collection work may not be the right one to represent you when you sell your business.

newsLIne | mAY/JUNE 2014 23

From neFa’s executive DirectorContinued from page 4

We hope that as loyal NEFA Members and industry supporters that you’ll appreciate our need to use such a low cost ─and highly effective─ communica-tion channel to support our association’s mission, and we hope that you’ll con-sider the milliseconds it takes to delete unwanted emails to be a worthwhile contribution to that effort.

I look forward to seeing you at an upcoming NEFA event soon!

Gerry Egan, Executive Director Direct Phone: 847-380-5052 Email: [email protected]

propose a reasonable payment plan. If you agree to a payment plan, stick to it.

• If you find you can not afford your law-yer, find one who is within your budget.

conclusionYour business can benefit greatly by hav-ing a trusted legal adviser. Hopefully, these suggestions will help you find one or enhance a current relationship. •

About tHE AutHor

arnold n. bressler is a senior partner at moses & Singer LLP in the Corporate/m&A and Securities and Capital markets practice groups and is Co-Chair of the Legal Ethics and Law Firm Practice group. Arnie counsels clients on a broad

range of corporate and securities matters, including mergers and acquisitions, and public and private offerings. Arnie’s clients include middle-market public companies and closely-held corporations in numerous industries, including technology and publishing. He also represents equipment finance leasing companies, as well as lenders and hedge funds financing such companies. Arnie is a regular author and lecturer on topics related to U.S. securities and corporate laws, as well as the issues facing lawyers in corporate legal departments and lawyers in private practice. He can be reached by phone at (212) 554-7636 or by email at [email protected].

At least as important as expertise, is to find a lawyer with whom you have a good rapport, who can provide honest and wise advice.

If you already have a lawyer, you should honestly evaluate whether he or she is fulfilling the role of trusted legal adviser. There are some signs to look for:

• Do you feel that he or she has kept up with the developments in the leasing industry and in your specific business? Is he or she a NEFA member?

• Are you able to share your strategic plans with him or her and get meaning-fully helpful suggestions?

• Are you treated like a valued client? Are your phone calls, emails, and texts promptly returned?

• Are you consistently dealing with the same lawyers or are new lawyers regularly being assigned to your matters?

• Does your lawyer communicate clearly?

If the answer to any of these questions is “no”, you owe it to your business to look for new counsel.

Of course, cost is an important consid-eration. However, over time, the right lawyer can pay for him or herself mul-tiple times over by enabling you to take advantage of opportunities and avoiding pitfalls.

communicationOnce you have chosen your trusted legal adviser, communication is the key to get-ting the most out of the relationship.

Here are some principles to bear in mind:

• Your lawyer needs all relevant infor-mation to be most effective. It’s the cli-ent’s responsibility to share information and answer questions fully and honestly. Don’t shy away from communicating negative facts. Those are usually the most important for your lawyer to know. Bad facts, which are hidden, have a nasty way of coming to light at the worst possible moment.

• Make sure your lawyer is clear about your goals in the particular situation.

• Establish a clear decision-making pro-cess. Who should the lawyer report to? Who can give the lawyer instructions?

• Don’t hesitate to ask questions if you don’t fully understand what the lawyer is telling you.

• Be open to the advice you are get-ting, even if it’s not what you want to hear. That’s what you are paying for.

Your lawyer can explain the advantages and disadvantages of his or her particu-lar approach or analysis. Ultimately, of course, the business decision rests with you, but if you are consistently overruling your lawyer, that’s a warning sign.

• Your lawyer should give you frequent updates on the progress of your matter.

• Give honest feedback. If there is some-thing bothering you about the way your matter is being handled, by all means, talk to your lawyer. By the same token, if your lawyer has done well, “thank you” goes a long way toward cementing a relationship.

expectationsIt’s important for both the client and law-yer to have reasonable expectations of the other. Every lawyer has had the experi-ence of parties to a transaction setting a completely unattainable closing date, without consulting counsel. This just leads to frustration.

Clients often express surprise at the length of time it takes for a matter to be complet-ed. Your lawyer should be able to manage your expectations in this regard. If your matter doesn’t seem to be progressing at a reasonable pace, you should discuss your concerns with your lawyer.

You have the right to expect your lawyer to respond to you promptly. On the other hand, your lawyer has the right to expect you to respect his or her time. There some-times are matters which require urgent attention. However, few things are as upsetting to the relationship as non-urgent late night and weekend calls.

Your lawyer should expect you to read the key documents of any transaction. You are not trying to do the lawyer’s job but as a sophisticated businessperson in the leas-ing industry, you can be a good partner in spotting potential issues.

Pay the billLike you, your lawyer is in business to make money. He or she can not do that if clients don’t pay their bills. Here are some things to keep in mind about legal bills:

• At the beginning of the matter, get an estimate of the cost. This is often difficult for a lawyer to do with precision, but it should give you some parameters.

• Maintain regular and frequent commu-nication about the time being spent on your matters. You should not be surprised when the bill arrives.

• If you can’t pay the bill when originally agreed, promptly notify the lawyer and


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