Shareholders Geoffrey Peters and Andrew Voorhees recently attended the National Equipment Finance Association (NEFA) 2023 Funding Symposium in San Antonio, TX. The theme was “Lassoing Opportunities for Success,” which gave attendees the chance to network with industry peers while participating in education sessions that offer guidance regarding operations, finance, and collections.
Now, Geoff and Andy are sharing their top takeaways!
Bankruptcies and defaults are increasing
Bankruptcies rose 68% in August 2023. That trend, coupled with increased defaults, make collections and recovery more important than ever.
Creditors are experiencing an increase in fraudulent applications for credit
Lenders should question the purpose of the loan, closely verify financial records, and question anything that may not make sense.
Portfolio management is more important than ever
The economy is still in flux, and it is currently unknown whether we are in for a soft landing or a recession. Managing your portfolio proactively can help weather any storms on the horizon.
Key tips in portfolio management
- Workout opportunities: Many times, the best solution is to keep the collateral with a paying customer. If and when a default occurs, it is important to determine if there is a viable workout solution with the customer to keep a mutually beneficial relationship going. It is also important to distinguish between sincere attempts at workout with mere delay.
- Act quickly: If default has occurred, and a workout is not possible, it is important not to wait before taking action. Waiting to act could mean reduced opportunity to recover secured collateral and reduced opportunity to collect from a financially viable entity. Seeking collection representation within 30 days of failure of internal efforts to collect is paramount.
- Get information up front: No one hopes for a default in an equipment lease transaction, but planning for the worst is a best practice. Getting all information about your borrower can greatly assist recovery efforts later. Information such as address, phone number, location of collateral, bank account information, employment information, corporate structure, etc. will make the road easier if a default occurs.
- Watch out for liens: Due diligence to ensure the collateral is not already liened by a prior creditor is paramount to ensure clear title. Also, be aware of any warehouse or repairman liens that may exist or rights to the collateral may be affected.
If you have any questions about this conference or our commercial collections, bankruptcy recovery, or real estate default solutions, contact Geoff and/or Andy at any time.
This blog is not a solicitation for business, and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
