Get a new lease of growth with cloud technology

Equipment leasing remains essential to the worldwide economy, especially for small and medium-sized enterprises. In nearly every industry, leasing allows firms to acquire much needed equipment with minimal upfront expense and flexible payment plans.

According to the Equipment Leasing and Finance Foundation, seven out of ten businesses use at least one form of financing to acquire equipment. 62 cents of every dollar spent on equipment is financed, totaling US$922bn in 2015. In this highly competitive, US$1 trillion industry, success depends on finding new ways to drive revenue through greater transaction volume and rapid time-to-market for new products. Increasingly, technology becomes the high octane fuel that drives market-leading lessors forward.

One of the most effective ways to transform a leasing business is to upgrade its fundamental software – especially if that business relies on traditional, on-premise legacy systems. Small and mid-size organizations can now compete on a level playing field with large and entrenched lessors. Cloud applications allow these businesses to quickly ramp up their operations and to accommodate all types and sizes of leasing portfolios.

Journey to cloud
In response to these trends, today’s lessors need nimble information systems in order to handle increasing demand while controlling costs. They need clear operational visibility through a single system of record. Instead of relying on old technology and manual processes, they need flexible IT solutions that can automate underwriting and servicing platforms, drive down expenses, and lower asset risks. Many of them are looking to the cloud to drive profits and growth.

In contrast to more traditional approaches, in which hardware and software resources must be purchased, installed, and maintained, cloud computing resources are available to be “leased” for a comparatively small monthly fee. You only pay for what you use, just as you do for household utilities or heavy equipment. The cloud computing resources are available whenever you need them and the fees are based on the level of usage. It is a paradigm that lessors know well.

Classifying lessors and their challenges
Before delving into the features and benefits of today’s cloud-based leasing systems, let us examine the main categories within the leasing industry and the key requirements that businesses face within those categories. Leases may be classified by asset class and ticket size based on the value of the equipment being leased.

Legacy systems: Equipment and vehicle lessors that run old technology and rely on error-prone manual processes have difficulty accessing accurate, real time information. Integrating disconnected data sources is a tedious process that can take several weeks.

Lack of visibility: Fragmented systems lead to duplication of effort and lack of standardization for common tasks. In extreme cases this can compromise operational visibility and control.

Time to market: Equipment leasing businesses often find it difficult to introduce new product offerings in a timely manner. Software developers typically need to modify applications to introduce new products to market – a lengthy cycle that may exceed the window of opportunity. Expanding leasing services to new geographies also requires substantial infrastructure and dedicated teams.

Accessibility to external organization: Another challenge arises when lessors seek to collaborate with extended organizations of vendors, dealers, external sales reps, collectors, and repossession agents, all of whom need access to current information and some level of control over the data. This makes it difficult to scale up quickly or control new business ventures.

Poor compliance management: Lessors with old technology are unable to respond quickly to changing regulations and expanding business environments. As a result, they are unable to adapt to market changes and respond to new opportunities. To resolve these challenges in a comprehensive way, lessors need to revamp their legacy information systems and adopt modern solutions that will streamline operational processes and position them for growth.

Positive impact on leasing operations
Today’s cloud-based leasing solutions hold tremendous promise for equipment lessors. The best solutions include cost-efficient and flexible processes to efficiently manage lease portfolios, increase transaction volume, and help lessors bring new products to market.

Cloud-based solutions also automate credit decisioning and collateral evaluation processes, providing quick estimates about leasing arrangements to applicants. They simplify the process of lease generation. For example, customers can finance multiple assets in a single lease. Cloud systems streamline handoffs among an extended organization, reducing costs and improving asset management. Lease lifecycle management.

A cloud-based solution can effectively manage the entire lease lifecycle without any hassles.
o Automate and manage application processing, credit evaluation, credit scoring, collateral evaluation, and stipulation management. Sales representatives and dealers can easily provide estimates to customers, submit leasing applications, and review application status
o Service lease contracts, manage the equipment lifecycle, and track multiple assets on each lease
o Automate billing, payments, and the application of charges
o Set up collection queues and strategies; track promises to pay. Operating models. Cloud-based leasing solutions enable lessors to keep their operating models in sync with evolving business requirements. For example, a lessor may start with a centralized operating model in which the parent organization manages all operations for new locations. Over time, operations can be gradually decentralized as the business expands

As competition increases, the challenge to both new entrants and existing lessors is to grow revenue and improve profit margins. Market leaders are leveraging the power of cloud technologies and building their businesses around modern, efficient applications that can transform their businesses and serve as a platform for ongoing growth.

(The article is authored by Mukul Mittal, executive vice-president of Products, Cloud Lending Solutions)