2013 annual funding symposium · please mark the 2014 national equipment finance summit, april 2-4,...
TRANSCRIPT
inside this issue:Five Fundamental lean PrinciPles that will increase your customer value and comPetitive advantage
continuing education and certiFication
membershiP has its Privileges
KeeP your lean business Process a customer-centric one
newslineNational Equipment Finance Association
sePtember/october 2013vol. 5, no. 5
2013 AnnuAl Funding
SympoSium
2 newSline | SEPTEMBER/OCTOBER 2013
NEFA hEAdquArtErsP.O. Box 69Northbrook, IL 60065-0069847-380-5050 main847-380-5055 [email protected]
ExEcutivE dirEctorGerry [email protected]
sENior AssociAtioN coordiNAtorKim [email protected]
NEwsliNE EditorChelsea [email protected]
AdvErtisiNg sAlEsLisa [email protected]
dEsigN & ProductioNR&W Publishing Associates3534 Caley RoadNewtown Square, PA [email protected]
NEFA Newsline ©2013 is published by the National Equipment Finance Association. All rights reserved. All opinions expressed in the articles, analysis, interpretations, etc. within this publication are solely those of the individual. For editorial information, please contact Chelsea Kirtley at 727-450-9870.
newsline
contents sEPtEmbEr/octobEr 2013 • Vol. 5, No. 5
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6 FivE FuNdAmENtAl lEAN PriNciPlEs thAt will iNcrEAsE your customEr vAluE ANd comPEtitivE AdvANtAgE By Abbie DeYonge
11 coNtiNuiNg EducAtioN ANd cErtiFicAtioN: why it’s imPortANt to stAy oN toP oF your gAmE By Reid Raykovich, CLP
14 mEmbErshiP hAs its PrivilEgEs By Stephanie Hall
18 KEEP your lEAN busiNEss ProcEss A customEr-cENtric oNE By David Schaefer
depARTmenTS
10 BRoKeR line coNsidEr thEsE two quEstioNs: whAt is thE stAtE oF your comPANy? do you PArtNEr with your EmPloyEEs? By Marc Keepman
17 legAl line bE surE your lEssEE’s/dEbtor’s iNsurANcE coNtAiNs “stANdArd” covErAgE By Victor Harris
20 NEFA tidbits
23 memBeR line thomAs A. grAy, Esq. smith dEbNAm NArroN drAKE sAiNtsiNg & myErs, llP
newsLine | SEPTEMBER/OCTOBER 2013 3
executive committee
President John rosenlund, clP PORTfOliO finanCial SERviCing COMPany
Vice President Kyle Gilliam, clP aRvEST EquiPMEnT finanCE
treasurer John donohue DiRECT CaPiTal CORPORaTiOn
secretary tara aasand gREaT aMERiCan inSuRanCE
immediate Past-President huGh swandel ThE alTa gROuP
Board of directors
miKe coon TaB Bank
william Ford fORD finanCial SERviCES, inC.
Brad harmon, clP FiRST STaR CaPiTal
terey JenninGs, clP finanCial PaCifiC lEaSing, llC
Jesse Johnson lEaSETEaM, inC.
Jim merrilees, clP TiP CaPiTal
daVid normandin, clP PaCTRuST Bank EquiPMEnT finanCE
Bruce smith, clP DivERSifiED CaPiTal CREDiT CORPORaTiOn
Gary souVerein PawnEE lEaSing CORPORaTiOn
diane williams BankERS lEaSing COMPany
nefa 2013 Board of directors
National Equipment Finance Association
letter
From neFa’s President
funding symposium time already?
The answer is a big resounding—Yes! We hope you had a safe and fun summer, and now that fall is in full swing—Welcome to Nashville—home of country music and the best darn symposium in the world! I have had several people ask me “What is a sym-posium?” It has two meanings in ancient Greek. One is a social institution (i.e. drinking party-that’s what it says!) but of course the one that falls more in line is “an academic meeting” or gather-
ing of those to teach and learn. I guess depending what time you are reading this, it can have a dual meaning.
Of course, our intent is the latter meaning, as an academic gathering of those wishing to teach and learn. During the planning of this conference, we beefed up the educational sessions as well as provided plenty of time for you to set up meetings with funders, lenders, and other service providers. Our excellent group of exhibitors is one of our largest ever, and makes this the “can’t miss” conference event of the year.
We have a lot of people who spent a lot of time creating these sessions and arranging for speak-ers, and I want to thank the conference committee, and its hardworking Chairperson, Stephanie Hall, for putting together an outstanding conference. Because of these efforts, we are expecting close to 200 attendees, which will make this one of our highest-attended conferences since the merger. Long time attendees will recognize a lot of new faces, as we have a large group of first time attendees.
If you are a first time attendee—a big welcome! If you have any questions, please contact any Board Member or NEFA Staff Member. We want you to get the most out your experience here in Nashville, and take home tools and skills to incorporate into your business.
Another very important aspect of the Fall Symposium is the NEFA annual meeting. There is Association business and other items to share with you. We will be electing new Board and Executive Officers for 2014 and presenting the Chris Walker Memorial Member of the Year Award for 2013. As many of you know, the NEFA Executive Committee renamed this award last year to honor our good friend and tireless volunteer, Chris Walker, who passed away in 2011. This award is given to honor his memory and volunteer spirit, as he was a tireless worker for NEFA, the CLP Foundation and the entire industry. Last year’s recipient was Randy Haug, of Lease Team. Who will it be this year? You’ll have to be there, as we are not telling in advance.
With the Funding Symposium events and Nashville nightlife calling, I need to close and get back to my NEFA duties. Along with NEFA Executive Director, Gerry Egan, his staff, and the NEFA Board of Directors, we thank you for being here and participating. Enjoy the sights and sounds of Nashville!
John G. Rosenlund, CLPNEFA President
John G. rosenlund, cLPDirector Risk Management Portfolio Financial Servicing Company
4 newSline | SEPTEMBER/OCTOBER 2013
lEttEr
From NEFA’s Executive director
welcome to the 2013 Funding Symposium! By the time this issue of Newsline hits the streets, the Symposium will be in full swing. As I write this, a few weeks in advance of the Symposium, it’s shaping up to be a great conference. We passed last year’s total attendance with some five weeks still left to go, and we have more exhibitors—including several first time exhibitors— than we’ve ever had before! Be sure you welcome them aboard.
We also have more new Broker/Lessor member attendees than ever before, thanks to a very successful promotion letting NEFA members offer significant discounts to Broker/Lessors they know.
Event-wise, this has been a busy year for NEFA, with more members organizing more local and regional business and social events than ever before. And we’re not done for the year yet! We’ve still got the popular NJ Expo regional event coming up December 8th and 9th.
Special note About 2014 Summit day pattern changeAlso on our calendar already is 2014’s National Equipment Finance Summit, scheduled for April 2-4, at the Scottsdale Resort & Conference Center, in Scottsdale, Arizona.
An important change to note for that meeting is the days of the week it will be on. 2014’s Summit will run from Wednesday through Friday instead of the Thursday through Saturday schedule we’ve used for prior conferences.
Ultimately, business is about family and friends. That’s why most of you work as hard as you do, in order to provide for and be able to enjoy time off with your families and your friends. We’re trying a shift in schedule for the Summit confer-ence so that we can deliver all the opportunity that conference provides without you taking any more time away from your family and other personal activities than is absolutely necessary.
Of course, at this beautiful resort, which is situated right on McCormick Ranch Golf Club’s two championship golf cours-es, with beautiful tennis courts, two pools and a spa, you just might want to sneak an extra day off to come early any-way—or better yet, bring your family and stay through the weekend…or longer. It is, after all, Scottsdale in early April!
In Scottsdale, for the 2014 National Equipment Finance Summit, the schedule and events you’re used to thinking of on Thursday will be on Wednesday, April 2, with our grand kickoff Welcome Reception being Wednesday evening. Exhibit hours and breakout sessions will run on Thursday, April 3, and Friday, April 4th, with the meeting wrapping up in time for many of you to get home by Friday night or early Saturday morning.
This change is something that’s been requested by many in our NEFA family. Your association is committed to adapt-ing and changing in ways that will make continued participation more practical, more fun, more productive, and more convenient.
Please mark the 2014 National Equipment Finance Summit, April 2-4, at the Scottsdale Resort & Conference Center, in Scottsdale, Arizona on your calendar right now while you’re thinking about it, and make sure you make a note of the correct days of the week…and we’ll see you in beautiful, sunny Scottsdale!
Thanks,
Gerry Egan Executive Director Direct Phone: 847-380-5052 Email: [email protected]
gerry eganExecutive Director
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members on the moveNational Equipment Finance Association
National Equipment Finance AssociationpeRSonnel
tEAm FuNdiNg solutioNs NAmEs cFoTEAM Funding Solutions announced Ryan Schooler, CPA as its new Chief Financial Officer.
First AmEricAN EquiPmENt FiNANcE NAmEs lEo cFoFirst American Equipment Finance announced that Laurie Leo has joined as chief financial officer.
sigNAturE FiNANciAl APPoiNts sEvEN sAlEs ExEcutivEsSignature Financial announced the appointment of seven sea-soned sales professionals throughout the country. They are: Harry Newman, Craig T. Cleary, Bill Musgrave, Rob McKenna, Mark Riley, Joseph D. Farinella and Rick Scheffel.
bluE bridgE FiNANciAl hirEs svP/busiNEss dEvEloPmENtBlue Bridge Financial hired Michael R. Noville as senior vice president of business development.
induSTRy newS
mAdisoN cAPitAl ProvidEs FiNANciNg For bliNK! ExtrAvAgANzAMadison Capital provided financing for a special summer edition of Boston’s Blink! Blink! is a light and sound event that trans-forms Boston’s historic Faneuil Hall Marketplace.
AscENtium cAPitAl Adds JPmorgAN to lENdEr grouPTo support the company’s growth strategy, Ascentium Capital announced the addition of another financial firm, JPMorgan Chase Bank, to its existing lender group.
AltA grouP ExPANds AssEt FiNANcE coNsultiNg sErvicEs iN chiNAThe Alta Group announced that two new senior directors have joined its firm in China, CapSol Management Consultants. Yankai Qu will work as managing director of professional devel-opment and Zhiping Zhang will work as general legal counsel.
cErtiFiEd lEAsE ProFEssioNAl FouNdAtioN Adds 15 clPsThe Certified Lease Professional (CLP) Foundation said fifteen professionals have earned the CLP designation. The new CLPs are: Jaimie Haver CLP, PacTrust Bank; Robert Knudson CLP, Go Capital; Chris Lerma CLP, Allegiant Partners; Michael Kianmahd CLP, Maxim Commercial Capital; Chris Maudlin CLP, PacTrust Bank; Javier Mendoza CLP, Maxim Commercial Capital; Andrew Nere CLP, Innovative Lease Services; Jake Nguyen CLP, Commerce National Bank; Kristan Parker CLP, Innovative Lease Services; Sam Shallenberger CLP, RJ Young; Kim Shea CLP, First Star Capital; John Snyder CLP, Culver Capital Group; Lisa Whitehead CLP, Pacifica Capital; Chet Zeken CLP, Go Capital.
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The concept of “Lean” first arose in the manufacturing context to create increased flexibility in manufacturing operations to allow manufacturers to succeed in times of recession and rapid growth. The overriding theme of Lean is to create increased customer value by removing excess “waste”
in the manufacturing or business process. As explained by Lean’s founder, Taiichi Ohno, “All we are doing is looking at the timeline from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line by removing the non-value added wastes.”1
A recent study by [Fourie] concluded that the application of Lean principles in the financial services sector can result in “improved cost, quality and service delivery time.”2 The Fourie study also found that the implementation of Lean principles results
Create increased customer value by removing excess waste. by AbbiE dEyoNgE
Five Fundamental lean principles That will increase your customer value and competitive Advantage
2013 Annual Funding symposium
in: an increased awareness of end-to-end processes; recognition of waste; increased process knowledge; improved process “flow;” increased utilization of business staff; improved visibility of operations; and increased working involvement.3
An equipment leasing business can expe-rience tremendous benefits by focus-ing on five Lean principles: Removing the Waste; Focusing on Quality; Process Standardization; Creating a Visual Workplace; and Building a Culture of Continuous Improvement.
1. Remove The WasteTaiichi Ohno identified seven “wastes” that every business should focus on removing; waste of overproduction, waste of waiting, waste of inventory, waste of overprocessing, waste of transport and waste of motion.4
In the equipment leasing industry, remov-ing “waste” will result in quicker process-ing of loan and lease applications, which may lead to increased customer value, satisfaction, and a higher close rate. Initial focus should center on the elimination of the wastes of overproduction, waiting, and defects, as these will likely result in
the greatest increases in customer value and efficiency.
2. Focus On QualityQuality, from a Lean perspective, is a “state in which the customer and provider realize full entitlement in every aspect of the business relationship.”5 To produce the highest customer value, you should strive to provide 100% acceptable results the first time.6 Mistake-proofing your processes and workflows will decrease the amount of rework performed, reduce costs, and improve the overall delivery and
experience. Focus on identifying and cor-recting ineffective standard processes and procedures; processes with multiple steps or parts; repetitive, fast paced operations; recently revised, and redundant processes.
Identify the cause of a mistake by per-forming a “root cause analysis”, asking “why” at least 5 times. Then take action.
PROblem STaTemenT – CuSTOmeR iS uPSeT.1. Why is the customer upset?It is taking too long to deliver the equipment.
neWSline | SEPTEMBER/OCTOBER 2013 7
2. Why is it taking too long to deliver the equipment?The vendor has not received a com-pleted financing package to pay for the equipment.
3. Why has the vendor not received the completed financing package?The funding source has not completed the funding process.
4. Why has the funding source not completed the funding process?The final funding package was submitted with missing information.
5. Why Was the final funding package submitted With missing information?The customer sales representative did not know what was required to submit a com-pleted funding package.
Successfully identifying, diagnosing and correcting the root causes of mistakes will allow you to quickly and efficiently improve your processes and achieve your goal of increasing customer value by pro-ducing 100% acceptable transactions the first time.
3. Implement StandardizationStrive to standardize your processes and workflows. Variable processes and non-standard workflows lead to the intro-duction of new “steps” and ultimately, mistakes and “waste.” Your efforts should target workflow standardization; work-place organization; information flow; visu-al management; and reporting methods.
You should take the time to observe, document, and understand the work that goes into the process. Pay special atten-tion to details. You will be surprised by the amount of variation and waste you will identify in the process. Utilize the tools identified above to remove or reduce waste. You will improve your flow and produce a better result for you and more value for your customer.
4. Create a Visual WorkspaceCreate a visual workspace. The Fourie study describes an effective financial ser-vices company as one in which “charts, diagrams and maps depict the latest infor-mation and must be used continuously to communicate information quickly and simply to the workers.”7
Identify key metrics and processes neces-sary to sustain or improve. Make these metrics and processes “visual” to your employees by posting them in a central location in the workspace or online with regular updates. You and your employ-ees will be able to easily and frequently see and understand how your business is doing, which will allow you to promptly and effectively reveal hidden issues asso-ciated with quality, standardization, and waste.
Creating a visual workspace will improve customer value. Visual controls allow you and your business to communicate more effectively with your employees, vendors, and your customers. Additionally, it will facilitate and promote the identification of future improvement opportunities in quality and standardization, and lead to the removal of waste.
5. Build a Culture of Continuous ImprovementThe final Lean element that is essential to increasing efficiency and customer value is building a culture of continuous improve-ment. You need to get workers to buy-in to the process and dedicate themselves to striving for constant improvement. You must create and refine your visual
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ABOUT THE AUTHOR
Abbie DeYonge is a Business Development Manager with Channel Partners LLC. Abbie is certified in Lean Manufacturing Process Improvement and has a successful record of quality improvement implementation at a Minneapolis-based healthcare organization. Abbie began studying and implementing the Lean Manufacturing Methodologies in 2005 with studies culminating in 2 Capstone experiences to the Toyota manufacturing facilities in Toyota City, Japan. Abbie also hold a Master’s Degree in Management from Cardinal Stritch University and
has extensive knowledge and experience relating to system implementation, strategic planning, and project management. She can be reached at 763-746-1512 or [email protected].
workspace, ensure your office is conducive to open, timely and efficient communica-tion and create a no-blame, encouraging environment.8 If you dedicate yourself to changing the culture and motivating your employees, you will be rewarded by improved quality, higher customer value, increased efficiency in your business pro-cesses and workflows, and benefits to your bottom line.
Through the use and application of Lean principles, you can achieve incremental, meaningful, and, most importantly, sus-tainable changes that will result in reduced waste, increased quality, customer value, and reduction in costs.
The principles of waste removal, focus on quality, process standardization, creating a visual workspace, and building a culture of continuous improvement, will result in quicker processing of loan and lease applications, which may ultimately lead to increased customer value, satisfaction, and a higher close rate.
ReferencesBlack, J. & Associates. (2005). The Rapid Process Improvement Workshop, Leaders Handbook. Seattle, WA: John Black & Associates.
EMS Consulting Group. (2009). Creating an Environment for Continuous Improvement. Retrieved September 11, 2013, from http://www.emsstrategies.com/dd050109article.html.
Fourie, C. J. (2007). Application of Lean Manufacturing Principles to the Financial Service Sector. Proceedings of The 24th International Manufacturing Conference, Waterford, Ireland.
Guinane, C. S. (2006). Mikel Harry on Six Sigma in Health Care. Journal for Healthcare Quality, 28(4), 29-36.
Liker, J. K. (2004). The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer. New York, NY: McGraw-Hill.1Liker, 2004 at p.72Fourie, 2007 at p. 63Fourie, 2007 at p 74Black, 20055Guianne, 2006 p. 306Fourie, 2007 p. 27FouRIE, 2007 P. 38EMS CoNSuLTING GRouP, 2009 •
10 newsLine | SEPTEMBER/OCTOBER 2013
Consider these Two Questions: what is the state of your Company? Do you Partner with your employees?By Marc KeepMan
BrOKer line
Summer is over and the kids are back at school. As a recent empty nester, I find the change invigorat-ing and yet somewhat sad. A new
phase of life has emerged, unknown to this point. It is time to question the status quo.
Reflecting on the year so far, I ask myself if I am better off now than before. As an industry, business is up. As individual leasing companies, the response is chop-py. Talking with many of you, I have found that the answer varies; some of us are doing well and others are struggling. Where you find yourself may depend upon how you approach the market.
Let’s start with the basic question: are you a broker or a lessor? As a broker, you rein-vent your company every month (every day, really). You are always starting from zero again. Your business is, financially, the sum of the fees received, less expenses. If transactions are plentiful, this method of hunting is quite good.
As a lessor, you build up a portfolio of customers and leases that you fund and service. Your business becomes the sum of the transactions you construct. As such, your portfolio can carry you through thin times. Like a savings account, portfolio ownership provides for periodic earn-ings without the immediate addition of new business. New business is always needed, though, as eventually revenue winds down. Sometimes 30-90 days is all you need to rebuild, replace runoff, and replenish your revenues.
As a lessor, you look for new deals while managing existing transactions and relationships. This mix gives you fees and rental revenues repeatedly over the months and years. Adding farming (port-folio building and management) to hunt-ing stabilizes revenues and cash flows.
With portfolio management also comes greater responsibility and workload. ...no
aBOUT THe aUTHOr
Marc Keepman is a 35 year veteran in the equipment leasing and finance industry. He is an active member of ELFA and NAELB. Mr. Keepman has founded two equipment leasing companies;
Sunrise Leasing Corporation and KLC Financial, Inc. He is currently president of KLC Financial, Inc., which specializes in leasing manufacturing, construction, titled vehicle, and other general business equipment. Mr. Keepman is a graduate of the University of Wisconsin, Madison, with a Bachelors degree in Economics. He later earned an MBA in Accounting and Finance from Regis University. He can be reached at [email protected] or 952-224-4302.
one said it would be easy, just worth it. So, why do it? Why add portfolio manage-ment? Why change what you already have going? Which is right for you?
Well, to begin with, ask yourself what are you trying to accomplish? Not as simple a question as it may first appear. Do you want cash now? Cash later? Consistency? Minimal responsibility? Maximum poten-tial? Future earnings? Employees? Tax benefits? Customer and employee loyalty? Time off? Visibility? Lots of questions which you will have to sort out over time. It is not too late to have a short-term and a long-term plan and to continually revise it. Put your experience to work.
How about retirement? Is your 401 (k) going to support you? Or do you need additional sources of revenue? Robert Kiyosaki, in his Rich Dad series, hammers the point home that we need multiple sources of income. Owning and managing a portfolio is, in my experience, a good source of income.
We all want our employees to be suc-cessful and committed. We want them to know more, do more, be more interested in how the business works, be more reli-able, and trustworthy with the important and delicate portions of our business. We want them to be there long term to increase productivity and profitability. Yes! Of course! Well, how do you do it? How do you do that and realize your own dreams of success?
There are probably many ways to do this. One way is to let them in on the benefits of ownership. Partner with your employ-ees. This has a number of positive effects. One, they learn more about all aspects of the business. Two, they become invested in the outcomes. Three, they gain a long- term perspective. Four, they act like and become partners and risk managers. Five, their “new” attitude will make you more successful. Six, do you need six?
These people are the lifeblood of your organization. They could be working any-where, but they chose you. Bring them into the fold. Show them how it all works. Trust them to be good partners. Empower them to make well-thought-out, educat-ed decisions. You will be surprised how much more everyone has to give. Ideas flow; the fear of suggesting new and better approaches or processes evaporates. Is it perfect? No, but it is better than anything I have seen or participated in yet.
If you follow the Golden Rule (the original one), you will find great success. This ethic of reciprocity is basic to all great societies and organizations. Your company is no different. We each have a terrific pool of resources waiting to be teammates. The value of human capital has caught up with the value of financial capital.
The 2013 Funding Symposium is com-ing up in a few short weeks. This will be a very good time to discuss starting and funding your own portfolio while expand-ing the value of your human capital. •
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The job market has seized over the past several years, and the rare posted position goes quickly, and to a very qualified individ-
ual. More and more students are graduat-ing from college; a Bachelor’s degree and even a post baccalaureate degree is no lon-ger what it used to be. So how does one set themselves apart from their competition?
The equipment finance industry is unique in the sense that those who are employed within it often remain loyal and make a lifelong career out of it. When I graduated from college, I bounced around between industries until I found this one. At con-ferences, I often joke with others and we laugh about how none of us would have thought we would end up in this industry.
It wasn’t just the people and the ever-changing dynamics of the business that kept me interested. It wasn’t until I attended the NEFA Institute for Leasing Professionals (ILP), studied for several months, and then sat for the Certified Lease Professional (CLP) exam and passed it, that I realized I had inadvertently cho-sen my career. It was the experience of the additional education and certification that led me to where I am now.
educationA wise man (Gerry Egan) once stated, “Education in your own career, your cho-sen field of endeavor is the only asset that will pay you dividends in any market con-ditions, never losing value; using (spend-ing) it increases rather than diminishes its
principal value; and no government policy or market stupidity can ever rob you of it.”
It’s true; especially so in a relatively unreg-ulated industry with no mandatory licens-ing or continuing education requirements. Knowledge and information are some of the best investments you can make in yourself and something that no one can strip you of.
The Age FactorThis is especially important when you look at a person’s age, which no one has any control over. I can’t help the fact that I’m on the younger end of the spectrum in this industry, and while more mature individuals may complain about ageism, I can tell you that the reverse is true as well.
If there’s ever a question of how to set yourself apart from others, education and certification are your answers.by rEid rAyKovich, clP
2013 Annual Funding symposium
continuing education and certification: why it’s important to Stay on Top of your game
When applying for the Executive Director position of the CLP Foundation, I was constantly reminded that I didn’t have the “experience” of other candidates. What set me apart was my CLP certifica-tion. I had already proven to the Board of Directors that I took continuing education and certification very seriously; I believe it’s what led to their decision to hire me.
For argument’s sake, let’s also look at the opposite end of the spectrum and consider the more mature colleagues in the indus-try. Some feel threatened by the younger crowd and feel that employers value youth over experience. If that’s the case, how do older people separate themselves from the younger generation? Again, I argue that it is continuing education and certification. It’s an unstoppable combination when a person has experience, education, and certification; the younger candidate will never be able to compete. It’s a reality check for me to realize that I was a CLP certification away from not becoming the Executive Director of the Foundation.
A customer’s perspectiveYour customer looks for the best person out there. With the age of the Internet, almost anything can be researched without the assistance or expertise of others; but with the abundance of information comes the frustration of having to wade through all of it. Do you ever go to a website, scan it briefly, and then get overwhelmed? What if you were able to show your cus-tomer that you’ve done the research for them and that you won’t waste their time and give them information that they don’t need? With your continuing education, you can assure them that you have the latest information and can give them the confidence that you’re the “expert” that they can rely on.
certificationThere are critics out there who think that continuing education is worthwhile in and of itself because of the knowledge the student gains. I agree with this statement; information and knowledge are great, but why not take it a step further and gain a certification which proves that you have become a master in your industry. It is gaining your CLP certification that makes you stand apart from others.
In 2003, I was only 3 years out of college, and after a serious health issue, I found myself working for Premier Lease & Loan Services, now Great American Insurance. We had a fairly unique product, in that we offered forced place insurance and would be categorized as a service provider. I was
12 newSline | SEPTEMBER/OCTOBER 2013
a Relationship Manager at the time, but I didn’t have a firm grasp of what was keeping my clients up at night. I wanted to know everything that my clients knew, so I made the decision to attend the ILP and then use it as a kickoff to study for the CLP exam. I understood that I would not be able to become an actual “Certified Lease Professional” because I didn’t have the required time in the industry, but it was the ultimate crash course in the equip-ment finance world. After completing the process, I felt as though I had worked in the industry for years, and I could under-stand my clients’ frustrations and was able to address them more effectively and intelligently.
In some instances, it’s not certification solely for the individual that’s impor-tant, it’s what certification means for the entire company. Financial Pacific Leasing is a perfect example of this, and as a disclaimer, a previous employer of mine. Terey Jennings, CLP, SVP Business Development, once remarked, “If every-one in our company went through the process, would it make us a better com-pany? The answer is always ‘yes’.”
As our industry’s only measure of excel-lence, the CLP certification shows you took the initiative to understand all aspects of the industry and you have the designa-tion to show you are head and shoulders above other leasing professionals.
When the CLP Foundation surveyed CLPs in late June of 2013, 100% of the respon-dents agreed with the statement: “The CLP designation helps my business.” All survey respondents also agreed with the statement: “CLPs are industry leaders held in high regard.” If there’s ever a ques-tion of how to set yourself apart from oth-ers, education and certification are your answers. Why not help your business and become an industry leader held in high regard? The only thing stopping you is yourself. •
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About thE Author
Reid Raykovich, CLP took over as Executive Director of the CLP Foundation in April 2012. She has been active in the equipment finance industry since entering it in 2003,
leaving for a short while after the birth of her daughter. She is past Regional Director of NEFA and was chairperson for the 2009 NEFA Super Regional Exposition. Reid can be reached at 206-535-6281 or [email protected].
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If you could make a single, small financial investment that could poten-tially change the trajectory of your career for the better, wouldn’t you do it? What if I told you that this small investment would also help you develop relationships, broaden your knowledge and present you
with opportunities to collaborate with people you respect? And the time you invest is the only additional factor that limits your return. Membership in the National Equipment Finance Association is that investment. I made the investment a few years ago and I’ve made my return tenfold.
If you’re a broker/lessor who is not yet a member of NEFA, joining the association is the opportunity of your career. And there is a promotion that allows you to join NEFA as a new member and attend the 2013 fall Funding Symposium in Nashville for less than what it would normally cost for the membership dues alone.
Membership in the National Equipment Finance Association can offer you access to the privileges of relationship, education, and opportunity.
by stEPhANiE hAll
membership Has its privileges
2013 Annual Funding symposium
newSline | SEPTEMBER/OCTOBER 2013 15
I’ve been asked why I’ve been such a strong proponent of the membership promotion, and the best way to answer that ques-tion is with the famous American Express slogan, “Membership Has Its Privileges”. Membership in the National Equipment Finance Association can offer you access to the privileges of rela-tionship, education, and opportunity.
The privilege of RelationshipMembership in NEFA is one of the best ways to develop rela-tionships that will affect your business on a daily basis. I have gained colleagues and trusted mentors who are always willing to provide advice, let me bounce an idea off of them, steer me in the right direction, and help me avoid mistakes they’ve made them-selves; there is something about spending time face-to-face with a person at a conference that allows you to develop a more solid relationship than through phone calls and email correspondence. Spending time and developing working relationships and friend-ships with like-minded people, who understand your business, is one of the most rewarding experiences you’ll have.
Why are relationships so important? Imagine you’re an origina-tor who is considering a venture with a trusted vendor/supplier. You’ve been asked to offer the vendor’s customers a new finance structure that is a little outside of what you’ve sold to your fund-ing sources in the past. So, you call the funding source repre-sentative who you’ve known for years and spent time getting to know better at the last NEFA conference. Your funding source feels more comfortable with you and is happy to make conces-sions for you, and you are able to accommodate your vendor’s request.
The privilege of educationMany members of NEFA are professionals who have been in the leasing industry for many years and are more than willing to share their wealth of experience with you. The NEFA member-ship consists of folks who believe in sharing the pitfalls and suc-cesses they’ve had along the way.
Investing your time in association conferences gives you access to multiple educational sessions with leading industry profession-als. If you’re a broker/lessor, chances are that you fall into the category of “small-business owner”. It wouldn’t be feasible for many small business owners to pay for the individual educational opportunities that associations can provide. Wouldn’t it be great to have access to the same training that Fortune 500 companies have employed to save billions of dollars? Lean/Six Sigma meth-odologies have saved Fortune 500 companies more than $427 billion over the past 20 years by helping them eliminate waste in their processes. This fall’s Funding Symposium offers NEFA members two educational sessions that can show you how to implement Lean practices in your business.
The privilege of opportunityAre you looking for the opportunity to develop a network of col-leagues who will act as a sounding board for your latest business undertaking? Do you want to learn where or how other broker/lessors are accessing opportunities to secure funding to hold their own paper? Do you wish you had the opportunity to surround yourself with people who will help you grow professionally? Join NEFA and attend networking events and conferences.
The National Equipment Finance Association consists of indus-try veterans, business owners, and respected members of the equipment finance community. This is an association run by a board of directors elected from the membership pool. So people
Your Clients Need Funding to Grow and You Need a Partner You Can Rely On.
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just like you are representing you, people who understand that offering a platform for originators, funding sources, and service providers to connect and create opportunities to collaborate is of the utmost importance.
Recently I spoke with a friend in the industry about his thoughts on NEFA and what he’s been able to take away from his mem-bership. He commented that one of the most rewarding opportu-nities he’s gained from NEFA was the opportunity to collaborate with a trusted friend and colleague; it was at a conference that these two were able to enter into discussions that led them to a joint project.
Make the investment. Set yourself up for success. Your financial investment is minimal. The time you invest is at your discretion, but the benefits you’ll reap and the privileges you gain are price-less. Oops! Another credit card company slogan! •
16 newSline | SEPTEMBER/OCTOBER 2013
About thE Author
Stephanie Hall is Manager of Broker Services for Bryn Mawr Funding, a small-ticket, A-credit funding source. She began with Bryn Mawr in 2006 and is currently responsible for business development. Stephanie is a graduate of Evangel university in Springfield, Missouri. She was previously a corporate sales trainer for MCI WorldCom and worked in marketing for the country’s
largest privately-owned automotive remanufacturing company, based in Philadelphia. Stephanie is actively involved with the National Equipment Finance Association and the National Association of Equipment Leasing Brokers. She can be reached at [email protected] or 610-581-4997.
newSline | SEPTEMBER/OCTOBER 2013 17
be surE your lessee’s/debtor’s insurance contains “standard” coverage by victor hArris
lEgAl line
This article teaches one practical point: All equipment lessors and secured creditors should make sure that their lessees and debtors have insured the leased equipment and secured collateral with policies containing provisions known as “Standard” coverage clauses.
All effective equipment leases, equipment financing agree-ments, and security agreements require lessees and debtors
(collectively, “debtors”) to purchase and maintain insurance concerning the leased equipment and collateral. These require-ments protect lessors and secured credi-tors (collectively, “creditors”) from loss due to damage, destruction and theft of the leased equipment and collateral, and against liability to third parties for prop-erty damage and personal injury result-ing from operation of the equipment and collateral. These insurance requirements permit creditors to specify the forms, cov-erage, amounts and other terms of the insurance policies, including a require-ment that such insurance as to the credi-tor shall not be invalidated or adversely affected by any act, omission or neglect of the debtor. This article focuses on the last requirement.
Despite the importance of these contrac-tual insurance requirements, the practi-cal realities and time constraints of the equipment leasing and financing indus-try often reduce the creditor’s ability to police insurance policy content to a mere checklist item before funding. If a debtor merely supplies a one-page generic docu-ment issued by an insurance broker (fre-quently entitled “Evidence of Commercial Property Insurance”) before the transac-tion is funded, the creditor often finds that the insurance requirements have been totally satisfied. The danger in such an approach is that the “Evidence” docu-ment does not contain the policy lan-guage, yet the policy language determines
the creditor’s insurance rights. If the “Evidence” document merely lists your interest as “Loss Payee,” that is a red flag showing your insurance coverage may not contain the “Standard” coverage contrac-tually required.
Solid insurance is often the most cost-effi-cient mechanism for a creditor to obtain payment on a defaulted equipment lease or financing agreement, when the debtor has wrongfully damaged the equipment or collateral or has wrongfully trans-ferred it to a person or entity that cannot be located or, even if located, has trans-ferred it again. There are several reasons why an insurance policy can be the most cost-efficient recovery mechanism, includ-ing the facts that insurance companies are usually solvent and lengthy litigation against them is often unnecessary in order to recover insurance benefits. In contrast, suing the wrongful debtor or transferee is often more expensive, neither of them may be solvent, or both of them may have convoluted stories. However, these rea-sons for enforcing the policy assume that it contains necessary “Standard” coverage protecting the creditor’s interests.
There are generally two types of credi-tor personal property insurance policy coverage clauses. The first, referred to as a “Standard” clause, effectively stipu-lates that the creditor’s interest in the policy proceeds shall not be invalidated or adversely affected by any act, omission or neglect of the debtor. The Standard clause creates a separate and independent insur-ance contract between the creditor and the insurer, and confers greater coverage to the creditor than the insured debtor has in the policy. Such coverage makes the creditor both the insured and the payee. The second type of clause, referred to as a “simple loss-payable clause,” merely provides that the loss shall be paid jointly to the insured debtor and the creditor, as their interests appear. In short, the credi-tor’s rights under this type of clause can-not exceed those of the insured debtor.
The following is an example of “Standard” coverage creating the important creditor rights noted above.
This insurance, solely as to the inter-est therein of the lender . . . shall not be impaired or invalidated by any act or neglect of the borrower . . . owner of the within described property . . . nor by any change in the title or ownership of the property, nor by the occupation of the premises wherein such property is located for purposes more hazardous than are permitted by this policy; . . .
This “Standard” coverage is from an endorsement issued by a major insurance company as part of a policy in an equip-ment leasing context. The author success-fully used this language to recover from the insurer the value of leased equipment after the debtor admitted that he wrong-fully transferred the equipment to others in violation of the lease.
The policy language quoted above has also been successfully used in several other post-default situations, including the debtor’s destruction of the equipment and the debtor’s failure to provide timely proofs of loss to the insurer. Moreover, one leading insurance law treatise states that “Standard” coverage prevents an insurer from avoiding liability because of “acts [by the debtor], whether done or permitted prior or subsequently to, or at the time of, the issuance of the policy.” See 4 Couch on Insurance 3d (2011 Rev. Ed.) §65:48.
However, in the post-default stage, the danger in the “checklist” approach
About thE Author
victor Harris conducts a litigation and transactional practice in San Rafael, California. Victor has been representing equipment leasing and financing companies, funding sources
and other financial institutions continuously since 1984. His practice focuses on all aspects of equipment leasing and financing, including litigation, documentation, insolvency, and licensing. Mr. Harris can be reached at the Law Offices of Victor Harris, at 415-479-8000 or [email protected].
Continued on page 22
18 newsLine | SEPTEMBER/OCTOBER 2013
There has been a recent resurgence, or perhaps a revisiting, of lean processes and principles as they pertain to running an efficient and effective business. The philosophy itself can be traced back to the times and wisdom of Benjamin Franklin and Henry Ford. When
stripped down to its essence – or dare I say, the leanest definition of lean – it’s the preservation of value with less work. When framed through the lens of day-to-day business operations, this means that the end goal should be focused on creating value for the customer, while using as few resources as possible and eliminating wasteful activities.
Many people believe that lean processes are reserved solely for enterprise level companies, or a term thrown around in manufacturing and other large scale production facilities. This is simply not the case. The systems and meth-odologies associated with lean business processes should be adopted by busi-nesses of all sizes in order to maximize and optimize operational efficiencies.
Let me start by reiterating what I believe to be the end goal of lean processes and principles—to provide ultimate value to your customer.
By DaviD Schaefer
Keep Your Lean Business Process a Customer-centric One
2013 annual funding Symposium
newsLine | SEPTEMBER/OCTOBER 2013 19
As the CEO of a small business perform-ing Loan and Lease Management Services in the commercial equipment industry, I can really only speak from my experience and hope that there are some universal truths that can be applied to any type of business.
Let me start by reiterating what I believe to be the end goal of lean processes and principles – to provide ultimate value to your customer. This basic truth must always be the litmus test by which we navigate the sometimes muddied waters of developing better systems for our busi-ness. It is not always clear where the ‘short circuit’ is when beginning to re-engineer and retool workflow processes. Finding the tools and time needed to identify and remove wasteful practices that don’t add to the customer’s satisfaction is a constant endeavor.
When I started Orion First Financial, some twelve years ago now, we made a concert-ed effort to build a foundation and culture of customer satisfaction. We focused on this fundamental first, and secondarily, on developing scalable and efficient pro-cesses and systems. We began by acquir-ing software and made it fit processes we had learned from our previous years of experience in the industry. We added staff as volumes increased all the while main-taining a key awareness of pleasing the customer by delivering what they wanted. Ultimately, we found ourselves growing revenue, but our profit was not growing as fast. Hiring more people just wasn’t the answer, so we began to look at the prob-lem differently, using lean management as a guideline.
We identified and documented our core val-ues and standards: Excellence, Collaboration, Integrity and Adaptability; so that as we started looking at changing how we did things, we would not stray from our core culture and our mission of delivering peace of mind to our customers and stakeholders.
We focus on client expectations, scop-ing out in detail the client’s desires, and memorialize the key deliverables - so both parties have clear expectations. Managing expectations is so crucial throughout this process and requires adept communica-tion at all touchpoints. I find this step to be very important as it relates to lean, because you must have a clear understand-ing throughout the chain of what is the goal. We have found that describing the deliverable clearly and specifically helps in designing the right process, not just an
efficient one. This can be very enlighten-ing and ensures that everyone on the proj-ect, including the client, knows what the final output will be. Behind the scenes, and before agreements are generated, our staff reviews each client expectation and ensures that there are processes in place to meet those expectations within specified service levels.
We have found that documenting the cur-rent processes or what we call the “As Is”, is a good first step when tackling a func-tional area. The objective is to understand why we do what we do. This can be a very tedious process, but learning why helps us to understand how a process evolved over time. Once we have a good understand-ing of the “As Is”, we then begin to edit the processes and remove or consolidate steps. We have found that many steps in the process added very little customer sat-isfaction value. Some of the steps may be required to comply with rules and regu-lations and may not be able to be elimi-nated. Either way, our goal is to build the “To Be” process that focuses on the fewest steps, to give the greatest customer satisfaction. The result is that we have a dynamic back office workflow that is fluid and always becoming more efficient and more streamlined.
Most recently, we focused on our credit and underwriting areas, as the workflow was almost entirely manual in process. Our credit staff was becoming over-whelmed, so we took up this functional area. When the team saw that they could produce more results with less work, it sunk in and has generated momentum. Many years back, we found ourselves in a similar dilemma in the collection area, as we had mostly manual processes. We were able to leverage more of our back-end systems and developed a proprietary Collection Management and Reporting System (CMARS™). The development and implementation of this system has allowed us to grow our portfolio under management significantly, with very little staff growth.
When you begin to understand and docu-ment the processes in your organization, you are then positioned to bring report-ing and measurement into the picture. Performance can be improved as Key Performance Indicators are established and systems are in place to monitor and report performance. Orion monitors KPI’s in every area of our operation, and a dashboard comparing current and histori-cal performance is distributed on a daily
basis. Monthly staff meetings and routine departmental meetings are used to com-municate Orion’s performance. By track-ing and measuring results, we are able to keep the entire team aware of where we are at, at all times, which ensures that we are all pulling in the same direction to attain the desired results. The end goal is being able to transcend the details to cre-ate a service culture that reinforces client satisfaction.
We are a service provider, so our objec-tives are focused on delivering peace of mind to our customers. Collaborating with clients is greatly encouraged within our organization. Capturing and report-ing KPI data and delivering this informa-tion to clients, combined with routine and consistent monthly client briefings and portfolio reviews, provides transparency and builds greater trust with the client. We exist to satisfy clients, and enjoy deliv-ering a suite of robust services so they can place more emphasis on growing their businesses.
So, don’t let lean intimidate you. It isn’t just large companies and manufacturers. Many do it without even knowing that they are practicing some of the principles. It can be as simple as where to put the copier or printer so it is close to those that need it most. The real advantage of imple-menting lean systems and methodologies is that it gives a common language and structure to your business - so everyone in the organization can be looking for ways to improve the customer experience, while striving to do so in the most efficient ways possible. •
ABOUT THE AUTHOR
Mr. schaefer is the founder and Chief Executive Officer of Orion First Financial, LLC which was established in 2001 as a small ticket, commercial equipment lease servicer and advisor. Dave has over
thirty years of experience in the commercial equipment finance industry, including senior management responsibility for treasury, operations, information technology, accounting and portfolio management. He can be reached at 253-857-9610 or [email protected].
20 newSline | SEPTEMBER/OCTOBER 2013
tidbitsNational Equipment Finance Association
National Equipment Finance Association
AdveRTiSeR indexAllegiant ...............................................................................................................13AMA .......................................................................................................................16Boston ..................................................................................................................... 5Channel Partners .............................................................................................12ECS ..........................................................................................................................13Equipment Engine ..............................................................................................9Financial Pacific ...............................................................................................16Great American ...................................................................................................8
Lean .......................................................................................................................22Lease Team .........................................................................................................24Leasing Solutions ............................................................................................... 5Merchant Cash & Capital .............................................................................15NEFA .........................................................................................................................7PAC Trust .............................................................................................................12PADCO ..................................................................................................................15
2013 Funding SympoSium & AnnuAl
BuSineSS meeTingocToBeR 10-12
NASHVILLE MARRIOTT AT VANDERBILT uNIVERSITY
SponSoRS To dATe:Allegiant Partners Incorporated • Ascentium Capital •
Bank of the West • Business Credit Reports • Channel Partners LLC • ECS Financial Services, Inc. •
Financial Pacific Leasing, LLC • Great American Insurance •
GreatAmerica Portfolio Services Group, LLC • LeaseTeam, Inc. • Maxim Commercial Capital, LLC •
PacTrust Bank Equipment Finance • Pawnee Leasing Corporation • Peretore & Peretore, P.C. •
RLC Funding a Division of Navitas Lease Corp • RTR Services, Inc.
exHiBiToRS To dATe:Allegiant Partners Incorporated • Bank of the West •
Blue Bridge Financial, LLC • Blue Chip Leasing Corporation • Boston Financial & Equity Corporation •
Bryn Mawr Funding • Business Credit Reports • Channel Partners LLC • CLP Foundation •
Collateral Specialists, Inc. • Dakota Financial, LLC • Diversified Lenders, Inc • ECS Financial Services, Inc. • EquipmentEngine Financial Services Company, LLC •
Financial Pacific Leasing, LLC • Fora Financial • Gotleads, a DF Interactive Company •
Great American Insurance • LeaseTeam, Inc. • Monitor • MRK Leasing, LLP • Nassau Asset Management • Olde City Financial, Inc. • PacTrust Bank Equipment Finance •
Pawnee Leasing Corporation • Quiktrak, Inc. • RLC Funding a Division of Navitas Lease Corp • RTR Services, Inc. • Securcor, Inc. • TAB Bank •
United Capital Funding Corp • Varilease Financial, Inc.
Volunteer SpotlightStephanie Hall began her career at Bryn Mawr Funding in 2006, just two months after the company opened as a small-ticket funding source. Bryn Mawr Funding is a subsidiary of the Bryn Mawr Trust Company (NASDAq: BMTC). As a member of the
Bryn Mawr team, Stephanie has gained extensive experience in credit analysis, documentation, funding and currently manages business development as Manager of Broker Services. Stephanie is a graduate of Evangel university in Springfield, Missouri. While earning her bachelor’s degree in Management, with a minor in Spanish, she worked for MCI WorldCom in sales. Following graduation, she became a corporate sales trainer for the company. After leaving MCI, she worked in marketing for the country’s largest privately-owned automotive remanufacturing company, based in Philadelphia. The sales and marketing skills she developed in these positions transferred perfectly to Bryn Mawr Funding. Stephanie actively represents Bryn Mawr Funding in the leasing industry associations and is currently serving as the chairperson of the National Equipment Finance Association’s Funding Symposium, to be held in Nashville, TN October 10-12th. She is a vocal advocate of ours, she works to encourage new broker/lessor members and is a willing contributor to NEFA’s blog. Stephanie is also a member of the planning committee for the NAELB’s 2013 regional conferences and is a volunteer for the NAELB new member screening committee. Stephanie is an avid reader, a music enthusiast, an animal lover, and Yankees fan. She lives in the Philadelphia suburbs with her husband, Jeremy, and her Boxer, Lexi.
STepHAnie HAllBryn Mawr Funding
newSline | SEPTEMBER/OCTOBER 2013 21
AdvAnTAge FinAnciAl SeRviceS, llcPeter Davison
AmeRiQueST TRAnSpoRTATion SeRviceSMike Hamilton
ATlAS leASing And FinAnce, llcJohn Krutko
BAncleASe AccepTAnce coRpoRATionRon Mitchell
BuSineSS cRediT RepoRTSJeff Dobbins
coAST commeRciAl cRediT, llcMichael Ford
coAST eQuipmenT lendingSusana Saja
comco-onewoRld eQuipmenT FinAnceJohn Luther Winchester
commeRciAl cApiTAl compAny, llcMr. Mitch Rice
coneSTogA eQuipmenT FinAnce coRpJoe Pucci
conSulTAnTS inTeRnATionAlJorge Canales
don BASKin TRucK SAleS, llcJoe Carter
eRvin leASing compAnyR.J. Grimshaw
gARwAcKi & ASSociATeSRay Garwacki
lpi HeAlTHcARe FinAnciAl SeRviceS, inc.Kurt Hess
monTRoSe gloBAl cApiTAl, inc.Arthur H. Muchnick
nATionAl leASing gRoup, inc.Kim Jones
oRAnge commeRciAl cRediTTina Cawthorn
Selco BuSineSS FinAnceJ Coles
TRenT & compAnyMr. Fred Trent
uniTed cApiTAl & eQuipmenT leASeBruce S. Green
uniTed cApiTAl Funding coRpMatt Perkins
wAde ASSeT mAnAgemenT gRoupJ.W. Oliver, Jr.
wc leASing, llcBT Steadman
2013 neFA Funding SympoSiumNashville Marriott at Vanderbilt universityNashville, TNOctober 10-12, 2013
ATlAnTA neTwoRKing luncHeonAnsley Golf ClubAtlanta, GAOctober 17, 2013
nJ expoTeaneck Marriott at GlenpointTeaneck, NJDecember 8-9, 2013
neFA FinAnce SummiTScottsdale Resort & Conference CenterScottsdale, AZApril 2-4, 2013
cAlendAR oF evenTS
wElcomE NEFA NEw mEmbErs!
22 newSline | SEPTEMBER/OCTOBER 2013
legallineContinued from page 17
described above often becomes harsh real-ity: the policy language applicable to you may not provide the necessary protection which could have been obtained at the transaction’s outset.
Some insurers are now issuing policies containing alternative provisions for insuring creditors, depending on which box is checked on an endorsement to the policy entitled “Loss Payable Provisions.” If the “Loss Payable” box is checked, the policy states as follows:
For Covered Property in which both [the insured debtor] and a Loss Payee shown in the Schedule have an insurable interest, we will:
1. Adjust losses (“losses”) with [the insured debtor]; and
2. Pay any claim for loss (“loss”) or dam-age jointly to [the insured debtor] and the Loss Payee, as interests may appear.
This type of language is a mere “simple loss-payable clause,” precluding the credi-tor from recovering from the insurer in the situation described above. However,
if the “Lenders Loss Payable” box is checked, the policy states in pertinent part as follows:
1. The Loss Payee shown in the Schedule is a creditor . . . whose interest in Covered Property is established by such written instruments as:
(d) financing statements; or
(e) security agreements.
2. For Covered Property in which both [the insured debtor] and a Loss Payee have an insurable interest:
c. If we deny [the insured debtor’s] claim because of [the insured debtor’s] acts or because[the insured debtor] has failed to comply with the terms of this Coverage Form, the Loss Payee will still have the right to receive loss payment if the Loss Payee:
(1) Pays any premium due under this Coverage Form at our request if [the insured debtor] failed to do so;
(2) Submits a signed, sworn statement of loss . . . after receiving notice from us of [the insured debtor’s] failure to do so; and
(3) Has notified us of any change in own-ership . . . or substantial change in risk known to the Loss Payee. (Emphasis added.)
This language (successfully used in anoth-er equipment leasing case) is a “Standard” coverage clause and entitled the creditor to recover from the insurer in a situation similar to that described above. Since all prudent creditors file UCC Financing Statements, most leases are construed as security interests, and equipment financ-ing agreements are security agreements, it is not difficult for you to insist on and qualify for this type of “Standard” cover-age clause.
If you are a lessor and concerned that the foregoing “Standard” coverage language conflicts with your lease, then you have the option to require the lessee to obtain the important “Standard” coverage from another insurer.
The bottom line is that creditors should be able to find the brief time necessary to implement a procedure for requiring that all insurance policies provided by debtors contain the important “Standard” cov-erage, at least for transactions approved on the basis of equipment value and/or exceed a reasonably-determined total dollar payment threshold. We all know equipment leasing and financing transac-tions may develop problems requiring sol-id insurance policies to recoup losses that may occur in the future. •
newsLine | SEPTEMBER/OCTOBER 2013 23
MeMber line
The “Big One” Better Left Unsaid
SMith DebnaM narron Drake SaintSing & MyerS, LLP
Thomas A. Gray, Esq.
This is uncomfortable for me. I enjoy personal contact and lis-tening to others, but talking about myself is not in my com-
fort zone. Perhaps the following story may provide some insight into my hesita-tion. Many years ago, my Dad and I took the quintessential fishing trip to a remote lodge in Quebec, Canada. We arrived at the lodge in a float plane, fished for days, saw wildlife, and lived the outfitters life. I was a boy living a dream, and it was the thrill of my early life. Many nice fish were caught. But, near the end of the trip, my Dad caught a monster of a fish, a 30 pound lake trout, the second largest ever caught at the lodge.
Fast forward a few years. My family and I are in upstate New York attending a reunion hosted by extended family, many of whom we had not seen in years. The reunion took place at my Mom’s uncle’s house overlooking Keuka Lake. The prop-erty included land, a boat house, dock, and boat. My Mom’s aunt and uncle had spent many meaningful days fishing on the lake with their kids. After the fami-lies exchanged long overdue hellos, we ventured down to the boat house. It was adorned with the usual watersport toys along with all sorts of items that fishermen
have hanging around, including photos of prized catches. My Mom’s uncle and cous-in gave us the tour and spent time describ-ing the lake, their boat and the many fish that they had caught over the years. It was obvious they enjoyed fishing those waters. One of their sought-after fish was the lake trout. In fact, that summer, they told us that they had caught some of the largest lake trout ever, several around 10 pounds. I thought to myself, well that’s not very big, wait til they hear about my Dad’s fish. All the while, my Dad listened patiently to the stories, showed interest in the boat, the fish, asked pertinent ques-tions, and just allowed them to share their stories. But, to my amazement, my Dad never mentioned his 30 pound lake trout or our fishing trip to Quebec. We eventu-ally strolled back to the house. Later in the day, feeling puzzled, I asked my Dad why he did not tell them about his 30 pound lake trout. His response: “Well, Tommy, you just don’t do that.” Of the many things I have learned from my Dad, this lesson in listening, humility, and allowing others to enjoy their moment, is among the most formative.
While keeping Dad’s lesson in mind, I will mention a few things about myself. The contents of our Durham, North Carolina
home tell most of the story. In it, you will see Kathy, my wife of 16 years, who is eas-ily the most impressive person I have ever met, and our energetic kids, Alex (6) and Alana (3). Scattered around the walls are many photos of our family and friends, trips around the U.S. and beyond, and some fish (of course). You will also see a photo of Yankee Stadium, some Duke and Pitt gear, and many Springsteen ticket stubs. There is a little dust on the camp-ing gear, backpacks, and hiking boots, but the snowboards are shiny. The Boston Marathon posters are reminders that we finished the race. In the garage are more wiffle balls, baseballs, and golf balls than one will ever need, along with a Jeep CJ-7 and a used tire from a NASCAR race.
As far as business and my connection with NEFA, I am an attorney with Smith Debnam Narron Drake Saintsing & Myers, LLP in Raleigh, North Carolina. I have practiced commercial litigation for over 14 years, beginning in Massachusetts, and having spent the last 9 years in North Carolina with Smith Debnam. Throughout my legal career I have han-dled many equipment leasing and finance type cases. I am attending the NEFA con-ference in Nashville in October, and look forward to listening to your story. •
Thomas A. Gray, esq. concentrates his practice in commercial litigation, equipment leasing and finance, creditors’ rights, and construction law. Tom has maintained his
practice concentration in commercial litigation and creditors’ rights since 1998. He possesses a J.D. from the University of Arkansas at Little Rock William H. Bowen School of Law, and a B.A. in Economics from the University of Pittsburgh. He is licensed in NC, MA, and the District of Columbia and is a member of National Equipment Finance Association (NEFA) and Equipment Leasing and Finance Association (ELFA). Tom can be reached at 919-250-2121 or [email protected].
