One

Question 1

What are the sources of finance? (some more relevant for independents, captive or bank owned)

Answer 1

• Owners Equity Capital
• Bank loans
• Owners directors loans
• Capital from partial sale of company
• Block discounting loans
• Sale of customer finance agreements
• Sales of assets and receivable
• Back to Back
• Agency arrangement with head lessor
• British Business Bank , Enable Fund

BS CBA BOOBS

Question 2

Advantages of direct?

DIRC

Answer 2

• Database of customers
• Lessor controls the relationship
• Reduced risk of fraud
• Strategic changes easy to implement

Question 3

Disadvantages of direct?

Answer 3

• Expensive running costs
• Competitive market, often leads to conceding on rate compared to indirect

Run Cowboy

Question 4

Advantages of captive or independent?

Answer 4

• Improved sales as one stop shop
• Higher conversion rate
• Higher margins
• Maintenance and servicing can be easily wrapped in
• Customer retention at the end of the lease as they are encouraged to early upgrade
• Shorter decision cycle as no negotiation with 3rd party
• Sales promotions during difficult times - 0% or low interest to boost sales
• Asset knowledge

CHHIASMS

Question 5

Disadvantage with Captive or independent?

Railcar RPM

Answer 5

• Additional resources needed for new business levels
• Loss of customer relationship for the funder
• Increased regulatory requirements for intermediary deals (FCA/FLA)
• Portfolio mix
• Residual risk
• Increased pressure to accept riskier deals
• Increased risk of fraud
• Increased risk of non-payment if there are 3rd party issues
• Asset risk due to low collateral value
• Change of ownership and relationship is lost

Question 6

What are the types of risk?

Answer 6

• Currency risk
• Credit risk
• Reputation & Residual risk/ Settlement
• Interest Risk
• Legal and Compliance risks
• Operational/Strategic Risk

Can Carrots Really Involve Little Oranges

Question 7

What are the due diligence checks?

Answer 7

• Checking approved/declined supplier database
• Review supplier company searches and bank searches
• Checking supplier invoice wording and supply term
• Verifying asset pricing compared to trading guide
• Verifying consumer credit licences
• Completing HPI checks
• Checking supplier stocking finance has been paid
• Seeking visual asset inspection (checking serial numbers)

Question 8

Sources of public information for a company to check?

7 points

Answer 8

• Electoral Roll
• CRA
• County Court Judgments
• Credit Account Information Sharing (CAIS)
• Credit Information Fraud Avoidance System (CIFAS)
• Companies House
• London and Belfast Gazette (insolvency)