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Finance Companies – Attract Small Manufacturers With Cloud-Based Automation

Date: May 11, 2017 @ 07:00 AM
Filed Under: Business Planning

The National Association of Manufacturers, citing a Census Bureau report, says the vast majority of U.S. manufacturers are considered small, with fewer than 500 employees. Presumably, most if not all would like to become mid-sized or large manufacturers. To get there in the face of relentless competition, these manufacturers increasingly seek help from their business partners, including the equipment leasing and finance companies with which they work.

Two of the chief advantages of the small manufacturer are speed and agility. In a manufacturing sea dominated by cargo container ships, they’re speed boats, zipping in and out of the wake. Unlike the behemoths they chase, they can turn on a dime, however they’re prone to running out of gas long before their stately floating companions (and capsizing when the waters get too rough).

On one hand, small manufacturers want to amplify their advantages – speed and agility – and attenuate their disadvantages – a relative lack of resources and infrastructure.

Finance companies can help with while increasing their value as partners. How? Through automation.

Finance Automation Will Be a Key Competitive Differentiator
If you follow technology news (or any kind of news, for that matter), you could be forgiven for thinking automation is coming to take all our jobs (and that artificial intelligences, hoovering up every bit of our Big Data, will turn us all into pets – if they don’t decide they have no time or patience for pets).

But it’s not all bad. Automation plays to a small manufacturer’s speed and agility while also giving them capabilities and capacities formerly reserved for all but the largest manufacturers. And increasingly, small manufacturers are looking to leverage partner automation in addition to their own. Going forward, finance providers that offer manufacturers the automation they need will have a competitive advantage and see benefits in their own internal operations.

Where Finance Companies Can Focus Their Automation Efforts
Because small manufacturers tend to be early – and eager – adopters of any new technology that will give them an edge, leasing and finance companies should be working to automate their processes as much as possible, as soon as possible. Here are some suggested focus areas:

CRM Integration
Many sales teams use customer relationship management (CRM) software, which can be cloud or enterprise based. CRM has a broad set of applications designed to help businesses manage customer data, customer interaction, business information and sales activity. Lessors and finance companies should be prepared to integrate with the CRM package utilized by the small manufacturer so that the manufacturer’s sales team can seamlessly access finance data on demand.

Application Processing
Processing most applications is a routine, heavily rules-based process, making it a ripe target for automation. At present many finance companies still devote significant human resources to it, slowing their response time, adding unnecessary friction to their partners’ sales workflow, and increasing their own costs.

Automation speeds routine credit application processing and increases accuracy. Even if this were all it accomplished, application processing automation would be well worth implementing. But it also frees staff to focus more of their time on “edge cases,” applications involving unusual requests or circumstances that merit a closer examination. Not all these applications will be approved, but because automation gives staff more time to review them, chances are that more of these special requests and circumstances can be accommodated, resulting in increased revenues for manufacturers and finance companies.

Collecting signatures on paper, especially when multiple parties are involved, can dramatically slow the financing process, with all the attendant cost and frustration. Fortunately, automation is again up to the task, offering manufacturers the ability to collect signatures via a variety of electronic channels all tied together and made easily accessible by cloud technology.

Asset-based Utilization
For small manufacturers that lease equipment (and employ relatively small headcounts), tracking usage and billing appropriately consumes considerable resources that are often desperately needed elsewhere. A finance company that can take some or all of this workload off their shoulders can be a lifesaver. Therefore, finance companies working with manufacturers that lease equipment should consider adding usage measurement deployment, resource usage tracking, billing and reporting into their service offerings. Ideally, manufacturers should be able to monitor these activities – and where applicable, even change certain parameters, such as rates – via a cloud-based dashboard or, better yet, an application programming interface (API) that integrates directly with the manufacturer’s order entry or CRM system. This network can also integrate with third parties that require the same data to provide partner services to manufacturers.

Managed Services
Many technology manufacturers and their value-added resellers (VARs) now deliver network, application, system and e-management services using a “pay as you go” pricing model. The total costs can be apportioned by the number of users (i.e., “seats”) or other metrics, including phone calls, hard-disk storage, etc., to provide a more accurate representation of usage costs.

Billing, collecting and tracking receivables can consume an inordinate amount of time and require an entire department dedicated to the task. An increasing number of finance providers are offering to take on some of this workload. The best solutions to this longstanding problem are heavily automated and transparent for manufacturers and their customers, offering fully branded billing and support services, while passing through payments directly to the manufacturer’s bank and instantly updating all receivables activity in the manufacturer’s CRM.

End-of-term equipment buyouts and upgrades can be particularly hard on a small manufacturer’s resources. Friction in this area can create leakage, thereby reducing a manufacturer’s control of secondary market opportunities. Finance companies that can help manufacturers address these issues cost-effectively have a definite edge in the marketplace. Opportunities for automation include end-of-term notices with easy links to sophisticated webform-based return requests; pickup/return tracking updates via email and text; and pass-through billing and collection on extended lease terms. As is the case with most finance-partner automation, direct integration with a manufacturer’s CRM is a big plus.

Application programming interfaces allow manufacturers to plug advanced financing functionality directly into their order entry/CRM system. This helps minimize or even eliminate the need to use a web portal and shuttle key data back and forth between an outside system and the manufacturer’s – which apart from creating unnecessary work, increases the chance of errors. In addition, APIs are often modular, allowing à la carte deployment that can be easily updated as needs change.

Support Small Manufacturer Advantages to Build Your Own
Speed and agility, combined with strong service and support, have always been major assets for small manufacturers. As the marketplace grows more competitive, these differentiators take on even greater importance. Finance automation supports all these advantages, and for an increasing number of small manufacturers, it’s no longer a “nice-to-have” but rather a “must-have.”

Offering such automation is critical to a modern finance company’s continued relevance and growth. By supporting a small manufacturer’s chief advantages with cloud-based automation, as well as offering working capital loans and credit lines to support manufacturer expansion, a finance company becomes not just a preferred partner but an indispensable one.

Miles Herman
President & COO | LEAF Commercial Capital, Inc.
Miles Herman is the President and Chief Operating Officer of LEAF Commercial Capital, Inc.
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