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Republic Leasing of South Carolina It is our belief that most wholesale funding sources don’t/won’t
market to their clients’ customers and in the few instances where they
do, prove to be poor marketers and wholly ineffective competitors. Unfortunately, they can only accept their size,
type of credit, and preferred collateral deals, they simply do not have
the broad range of sources available to a broker. As an example, Republic is a typical small ticket “wholesale”
funding source with more than 98% of our business originated by broker-lessors.
Like many pure third-party funding sources, we have no direct
marketing and our credit and funding operation is not set up to process
direct applications. Working on any kind of direct business, regardless
of the source, is not only painful but very costly and inefficient.
If our new parent, NetBank, had any commercial clients (it does
not), we would have to re-engineer and re-train to handle retail leasing
requests. Most true wholesale funders are more than happy to honor
a broker’s request to include a non-compete or non-circumvention clause
to their broker agreement: why wouldn’t they?
Like most wholesale funders, we made the decision that third
party business is best for us given our resources and capabilities. Do funding sources’ circumstances change? Absolutely.
Will some decide to begin direct marketing? Certainly.
What can a broker-lessor do to protect against predatory actions? Make certain that the lessee is YOURS through
value added service and continual contact. Having funded leases for more than 1600 broker-lessors since
1988, we receive a couple unsolicited calls a day from prior or present
lessees inquiring about additional financing.
In the past, we have referred those calls back to the Active
or recently Inactive broker (unless the disgruntled lessee refused the
referral, not uncommon). In
the rare instances we booked the deal, we sent a check to the broker
for 2% of the deal. For the
23 “Terminated” brokers still operating (cutoff for “cause” and we never
want to see a deal from again, ever) we would not refer the calls.
We have approved one such deal this calendar year. Processing inquiry calls from existing or former lessees
has proven so inefficient that we have stopped accepting direct applications
altogether. We merely refer
the call to the originating broker, Active or Inactive (we are temporarily
not accepting applications) by giving the caller the broker’s most recent
phone number and we follow with a heads-up call to the broker.
If the broker has been Terminated, we plan to refer the couple
such calls we get in a year to an Active or Inactive broker in the lessee’s
locale. Finally, it is our belief that a broker’s competition for
a vendor or lessee is not the wholesale funding sources but rather the
local banks, numerous direct dial-for-dollars lessors, and national
advertising financial giants, all of which contact businesses frequently
asking for opportunities to finance equipment.
Age old solutions: 1) know your funder, its capabilities and
practices; 2) once you have a great client, constantly prove you are
their best leasing source. Dwight Galloway Leasing News reported on the change in de-activating 100 brokers: |
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