In a special report, Leasing Life reviews
the collections functions of five leading equipment finance
companies. Here, Brendan Malkin examines the key issues facing
heads of collections as European leasing slowly returns to good
health.
Go deeper with GlobalData
For those writing the history of asset finance
and the 2009-10 recession, writedowns, bad debt, late payments, and
fraud will feature across many pages.
Given the significance of all this in European
asset finance, Leasing Life this month has part of
this issue to profiling the unsung heroes of leasing’s war
against the tide of bad debt: the collections specialists.
Interestingly, each of the four companies
profiled has a different approach to collections.
Partly this is because none of them are alike
– MAN Financial Services, for instance, is a captive, but State
Securities is a smallish regional lessor. UniCredit Leasing has a
European network focused on central and eastern Europe, while the
fourth company, the leasing arm of the Lloyds Banking Group,
operates almost exclusively in the UK.
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By GlobalDataThe size and focus of lessors does not alone
explain the reason for the disparity in approach to collections. It
also reflects the fact that there exists no single approach to
collections which works across all situations.
Common areas of disagreement are over the
timing of when to hire outsourced agents to assist with recoveries,
how to deal with companies at the start of the bad debt process,
and when to instruct external lawyers.
Another contentious area deals with when to
get tough with late payers. Some, certainly, are a lot stricter
than others, but several of the companies profiled here report
taking repossession action only as a last resort.
Certainly, lessors have had to impose stiffer
collections rules in response to the hardships of the recession.
They have also learnt some hard-won lessons – including the need
for employing in-house valuers, something which State Securities
has been doing for several years.
As the recession has meant leasing companies
have turned to other types of finance products in order to maintain
volumes and make themselves more appealing to their customers, some
collections specialists reported hiring in-house specialists with
invoice finance expertise for the first time.
Collections is an ever-moving feast, with
shifting priorities and competing ideologies. The truth might be
that there is no single method for collections that works across
all situations.
What is certain, however, is that the work of
the collections specialists never stops. Gill Payne, head of
collections at the Lemington Spa-based law firm, made this clear
when she told Leasing Life last month: “As sales teams
build up a flow of business again, the volume of collections
activity has grown in turn since the beginning of the year.”
Collections work never ends, it seems, even as
the tidal wave of the recession begins to taper.
