Developing Strong Leaders for the Commercial Equipment Leasing/Financing Industry
Weekly Sales Tip for Financing/Leasing Originators .
An Originator's 911 Call
I recently received a call from an originator in a panic. He was just informed that his company and its funding sources were going to pull-back from funding transactions in his specific niche. They were not exiting the niche, but increasing their credit requirements.
I asked the originator for his company's reasoning for the pull-back. The answer was not surprising. The company is experiencing a slight uptick in delinquencies in this particular niche and wants to focus on quality, rather than strictly volume. The company wants to remain a player in the niche, but it cannot afford to expose itself to unnecessary risk. The originator's concerns were:
Most of his existing clients or prospects wouldn't qualify under the new criteria.
He perceives that his company doesn't understand his industry well and his ability to make money moving forward will be greatly hindered.
He had anticipated these changes over the last few months and had reached out to other finance companies for potential employment. They either had stricter credit requirements than his company was proposing or were paying considerable less commission for his potential book of business.
The originator is a smart individual and explained that his success in the market over the past few years was based upon his ability to offer lower than market yields on transactions that were riskier than most lenders were willing to offer. He was a commodity player and there was no need to offer value over price. He was riding an opportunity and it was coming to an end.
I explained to the originator that there is plenty of business in the market under the new criteria that his company is proposing and that his current products (yield requirements) match the current market conditions. It is true that he cannot continue to be a bottom-drawer player and that he will need to offer greater value to attract the volume he had been used to. If he wants to be a "player" in the industry he will need to up his game. It is true that he had been pegged by his vendors, end-users, and competitors as a high risk, underpriced participant. If he wants to be a sustainable participant, he needs to embrace the changes his company is making and redefine himself in the market. Building a sustainable career requires the ability to generate quality assets.