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Is Your Finance Product More Than Just a Pretty Face?

June 15, 2023, 05:00 AM
Related: Credit

Salespeople who have worked for me over the years have heard me say that good looks and charm will only take you so far as a salesperson. You can sweet-talk and tap dance your way through the sale, but, at some point, the essence of your product will be revealed. This article is all about the equipment finance product and the key attributes that can make it a winner.

As context, we know that for the most successful salespeople, relationships matter. This is evidenced by the fact that in our industry, the customer contacts of top tier salespeople will follow them regardless of the company logo on their business card. This is also true when it comes to relationships with equipment vendors.

Those relationships, however, have a limit. Joining a firm with a flawed product can corrode even the strongest of bonds between a salesperson and the client.

In the equipment finance industry, our product is defined by four primary elements:

  1. Credit and Risk Appetite
  2. Pricing
  3. People
  4. Process

These four together make up what it is that equipment finance salespeople have to sell. Things like reputation, longevity, culture, marketing prowess, brand recognition, and leadership are all things that can enhance your product - even attract clients to use your product. But they do not define it.

While we intuitively know this to be true, it’s important to look at each element to see how they all fit together into a cohesive package that will make a company a success in its chosen markets.

Credit and Risk Appetite

This is one of the two most discussed attributes of a company’s product. In many respects, it is the calling card for any finance company. It reflects the degree to which a firm is willing to risk its capital in underwriting and lending to new and existing customers. It is also the centerpiece of a finance company’s strategy when determining the markets it wants to penetrate.

Options range from being a conservative, low-risk lender to taking a more liberal approach to lending that broadens the potential universe of customers. The former places a high value on keeping delinquencies and charge-offs low with an acute focus on portfolio quality. At the higher-risk end of the spectrum, companies will “buy deeper,” which is accompanied by more robust credit reserves to offset higher anticipated charge-offs.

Whether your firm plays at the extremes or somewhere in between, when it comes to risk, the next category must be properly aligned with that choice in order to be optimally marketable.


The second of the two most talked about components of a company’s product, pricing refers to the rates and payments a company is willing to offer on its leases and loans. It can also involve the amount of asset risk a company will take in setting residuals on its fair market leases.

Pricing is a byproduct of a company’s funding costs (debt and equity capital), its overhead, and its credit reserves. It is here where the alignment with risk appetite is critical.

If your strategic intent is to be a conservative lender, your rates need to attract better quality borrowers and reflect the lower risk to your company’s capital. Margins at this end of the risk spectrum tend to be leaner in exchange for a high volume of bankable business. Conservative lenders may elect to charge marginally higher rates but not if they expect to scale their business to any meaningful level.

If your funding costs and overhead put you in a position where you must charge rates higher than the market, then your credit appetite must be broad enough to attract business to you and away from your competitor. Accordingly, your credit reserves as well as the returns to your shareholders must be commensurately higher. Higher risk; higher reward.


Without overstating the obvious, this element refers to those individuals who interact with clients as part of the origination and post-origination effort. Apart from the salespeople themselves, it involves the functions of sales support, credit management, operations, customer service and collections. In some companies, this may extend to the accounting department if they undertake one or more of the above functions.

In my experience, it is quite difficult to find a company that doesn’t have good people in roles supporting the sales and post-sales process. Salespeople will generally tout their back-office staff as a competitive strength and a compelling reason to do business with their company. However, when their competitors also employ quality people, it is hard to lay claim to any distinctive competitive advantage that separates them from their rivals.

In general, I consider this element a given and cannot see this as anything other than a level playing field in the comparison to other firms.

However, when paired with the fourth and final element, the combination becomes a powerful competitive weapon


This least appreciated but highly impactful product characteristic involves the steps, handoffs and embedded procedures necessary to originate and book new business.

Given advances in technology together with increased client expectations, finance companies must address the “how the sausage is made” aspect of their business if they are to have any chance of staying competitive. When it comes to execution, is not enough to simply throw technology at a process with the hope that it will make it more efficient and effective. Business transformation experts advise companies to first fix your process, and then apply technology. To do otherwise is like painting over mold - you may have hidden the symptoms, but you haven’t addressed the root cause of the problem.

Process reengineering should carry the same importance as strategic planning but process too often goes unexamined and untouched for long periods of time. The mantra, “hey, it works” merely avoids the problem and fails to acknowledge the simple truth that nothing in business is constant. Business process reengineering (BPR), has been defined as a systematic, disciplined improvement approach that critically examines, rethinks, and redesigns mission-delivery processes to achieve dramatic improvements in performance in areas important to customers and stakeholders.*

Companies will often point to tweaks and fixes they’ve made over time as justification for not doing a more complete examination and renewal. Given the dynamic nature of our industry and factoring in economic, social and technological trends (not to mention the increasingly remote nature of work), the origination process should be reviewed and renewed every three to four years at a minimum. This effort should be undertaken with the involvement and oversight of an objective, experienced third party and must have the full-throated support and endorsement of the CEO and board of directors.

Sales, credit and operations employment candidates should consider asking the prospective employer some key questions during the interview process.

  1. When was the last time your origination process was renewed and transformed?
  2. Where and how is technology deployed to reduce friction for both customers and the employees who service them?
  3. Is process excellence considered a core discipline for the company?

Asking these questions will do more than just impress the interviewer with your thoughtfulness; the answers will give you the information you need to assess whether your employer’s product is marketable and worth the investment of your time and talent.

Employers should think about the answers to these same three questions so that when it comes time to attract and retain talent, your product is a source of great confidence and pride. Good leaders will take it one step further by driving a culture that encourages their employees to find better ways of doing what needs to get done.

While all of the elements of the finance product are important, the keys to a successful product are rooted in the alignment between credit and pricing and in the company’s commitment to continuous improvement of its core process.

As we navigate the market uncertainties that lie ahead, finance companies would be wise to apply some fresh thinking about their own product and what could be holding it back from being truly outstanding and set apart from the competition.

*U.S. Government Accountability Office, AIMD-10.1.15; Published: Apr 01, 1997.

Jeff Teucke, CLFP
Managing Partner | Endurium Advisors, LLC
A 40-year veteran of the leasing and finance industry, Jeff Teucke took an off-ramp onto the consulting bridge by partnering with the business transformation experts at Endurium to help financial services firms improve their mission critical processes, workflows and overall productivity. He previously ran sales and marketing teams for a number of companies in the equipment finance industry, including Siemens Financial Services, EverBank Commercial Finance and AT&T Capital. His insights into how process renewal frees up trapped value comes from having seen it from the inside of these same firms and today, he considers himself an unabashed process evangelist.
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