International Vendor and Captive Financing Programs PRESENTED BY JONATHAN L. FALES THE ALTA GROUP jfales@thealtagroup. com 423 -239 -2582
Vendor and Alliance Programs Differentiation from Captive Programs (for purposes of discussion) – “Captive” refers to vendor programs in which substantially all financing-related processes are performed, or controlled by, the vendor – In “vendor” or “alliance” programs, a third party performs some or substantially all of these processes
Different Perspectives, Different Objectives Vendors want: – Product sales support – Competitive tool – Country coverage – High credit approvals – Responsiveness – Training/marketing – Sales assistance – Fee income Lessors want: – Assets – Income / ROE – Programs that fit existing processes – Vendor commitment to program – Pro-active selling
Areas of “Opportunity” Ø Mutual understanding of program objectives (SLAs, volumes) Ø Roles and responsibilities Ø Asset financing requirements: soft vs. hard Ø RVs and remarketing Ø Closed-loop process and program metric improvement Ø Vendor executive buy-in Ø Vendor sales force training
Geographic Considerations Ø Outside of US (and EMEA), remote programs suffer from lack of focus at HQ Ø US credit parameters vs. local reality Ø Availability of qualified personnel Ø Lack of involvement in planning process (i. e. , US programs “force-fitted” into LA) Ø Reporting and consolidation Ø Culture – acceptance of financing Ø Respective geographic capabilities of vendor, lessor
Captive Programs Ø Why a captive program vs. a vendor program? Ø Captive program considerations Ø Geographic nuances
Why Captive? Perceived advantages of a captive program – Account control – Flexibility – no third party to deal with – Income – Balance credit risk decisions with vendor’s business objectives – Control of aftermarket – Use of cash
Captive Considerations Financial – Balance sheet impact – Analyst relationship management – Risk management very different – Treasury – Funding / Syndication Operational – Qualified personnel – Systems – Processes and controls – Integration to sales force and remarketers – RV and used equipment management
Geographical Nuances Ø Fighting for the mindshare of the parent Ø Commissions Ø Headcount and support Ø Availability of experienced resources Ø Career opportunities Ø Integration into and influence on the planning / budgeting process
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