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Challenging times

inside this issue:Tough Times & Real emoTions

Winning guaRanTies

BoosTing sales PRofiT in a DoWn economy

managing ThRough The economic sToRm

newslineNational Equipment Finance Association

a Publication of the national equipment finance association

maRch/aPRil 2009Vol. 1, no. 2

2009 sPRing confeRence issue

nefa3525 Piedmont Road NEBuilding 5, Suite 300Atlanta, GA 30305

newsline | MARCH/APRIL 2009 3

contents

nefa heaDquaRTeRs3525 Piedmont Road NEBuilding 5, Suite 300Atlanta, GA 30305404-760-2843 main404-240-0998 [email protected]

execuTiVe DiRecToRSteven [email protected]

associaTion cooRDinaToRKali [email protected]

memBeRshiP DiRecToRAlison [email protected]

memBeRshiP DiRecToRJoe [email protected]

Design & PRoDucTionLisa RafterR&W Associates705 Carpenter LanePhiladelphia, PA [email protected]

aDVeRTising salesElena [email protected]

NEFA Newsline ©2009 is published by the National Equipment Financing 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 Lisa Rafter at 215-765-2646.

10 Tough Times anD Real emoTions: making The RighT Decisions in DifficulT Times By Chris Enbom

12 WhaT Time is iT? By Jim Merrilees

20 no Time To “hunkeR DoWn” By Valerie Hayes Jester

24 BoosTing sales PRofiT in a DoWn economy By Murray Derraugh

29 managing ThRough The economic sToRm By Nancy Geary

DePaRtments

16 legal line Winning guaRanTies By Frank Peretore, Esq. and Fredda Katcoff, Esq.

22 BROKeR line iT’s Time To menToR By Scott Wheeler

31 Tao of mike By Mike Rehling

34 memBeR line:Brad Kissler

12

16

MARCH/APRIL 2009 • Vol. 1, No. 2

newsline

• Evolution from Nascency to Maturity

• Challenges

• Opportunities

• Drivers and Motivators

• Funding – The Number One Challenge

• List of Funding Options

• Creativity Can Eliminate The Challenge

FUNDING STRATEGIESFOR EMERGING MARKET LESSORS

SPEAKERS: SUDHIR AMEMBAL & LONI LOWDERWLN’s second exclusive webinar will introduce you

to funding strategies for emerging markets. AVAILABLE NOW!

ExclUSIvE WEbINAR

VISIT www.worldleasingnews.com/webinars.aspx

F O r M O r E I N F O r M aT I O N O r T O r E g I S T E r


a time FOR assOCiatiOn

On April 4-7, the National Equipment Finance Association (NEFA) will be hosting its first National Equipment Finance Summit in Orlando, Florida. This will be the first time on a national level that NEFA members will be able to come

together to discuss the current issues within our industry. This first meeting is being called a summit as we bring together some of the industry’s top professionals to help lead discussion and bring additional insight into the three key areas that are affecting our industry; portfolio management, credit and funding. Our first conference comes at a very crucial time as our industry continues to battle with a changing economy and weakening portfolio performance. Much like other lenders it is very important that our industry find its way through the current fog and continue to offer effective equipment financing for our commercial clients.

In my first letter from the president I noted the importance of association now more than ever. It’s during challenging times like these where the sharing of information and insights help paint a more complete picture of what’s going on and the best way to address certain issues. For NEFA, our number one goal is to provide a professional forum for networking so when times are good this helps to create new business opportunities but when times are tough it provides a platform in which to come together and discuss solutions and best practices for the challenges we face.

I look forward to the opportunity to meet with industry colleagues and discuss many of these challenges. One of those is the redefining of credit and how the application only business is now being underwritten. In addition we have seen our industry come full circle with the resurgence of full disclosure underwriting regardless of transaction size and more traditional credit analysis being performed. There are new thresholds of risk tolerance along with new minimum credit score requirements. Credit is tightening but more discussion needs to be had on how to affectively address this change while still offering a viable product.

Our industry is also seeing a continued decline in portfolio performance and this has the cause and effect of hampering funding. We continue to see an exodus of funding within equipment finance as more and more lenders pull back to deal with liquidity concerns and pressure in their portfolios. Funding is the engine that drives our industry so we need to address this challenge and identify ways to maintain a basic level of funding availability for our industry.

This issue of NEFA’s Newsline will be addressing many of these challenges. I hope that you find this information timely and informative and I look forward to the continuation of these conversations at our National Equipment Finance Summit in Orlando, FL, April 4-7.

Brent M. Hall, CLP

NEFA President

leTTeR

from nefa’s PresidentPResiDenTBRenT hall, clPPinnacle Business finance, inc.

Vice PResiDenTBRian BjellagRanDVieW financial, inc.

TReasuReRgeoRge PaRkeRleasing Technologies inTeRnaTional, inc.

secReTaRyRanDy haugleaseTeam, inc.

PasT PResiDenTBRuce WinTeR, clPfsg leasing, inc.

BOaRD memBeRs

chRis enBom, clPallegianT PaRTneRs, inc.

nancy geaRy, clPecs financial seRVice, inc.

ValeRie jesTeRBRanDyWine caPiTal associaTes

BRaD kissleRsTRaDa caPiTal coRPoRaTion

cuRT koVashu.s. BancoRP manifesT funDing seRVices

jim meRRilees, clPquikTRak, inc.

fRank PeReToRePeReToRe & PeReToRe, P.c.

chRis sanTyPaTRioT caPiTal coRP.

hugh sWanDelsWanDel & associaTes

chRis WalkeR, clPgReaTameRica leasing coRPoRaTion

scoTT WheeleR, clPWheeleR Business consulTing llc

BRuce WinTeR, clPfsg leasing, inc.

neFa 2009 BOaRD OF DiReCtORs

National Equipment Finance Association

Brent M. Hall, CLP

6 newsline | MARCH/APRIL 2009

PeRsOnnel

clP founDaTion announces 2009 officeRs & BoaRD

CLP announces following elections for two open positions on their 2009/2010 board of directors, the CLP Foundation Board unanimously approved the slate of new officers for 2009.

The Board of Directors for 2009 is:

President: Theresa Kabot, CLP - K2 Funding

Vice President: Nancy Pistorio, CLP - Madison Capital, LLC

Secretary: Robert Crivello, CLP - Windsor Capital Finance, Inc.

Treasurer: John G. Rosenlund, CLP - Radiance Capital, LLC

Past President: Robert Teichman, CLP - Teichman Financial Training

Directors: Joseph G. Bonanno, Esq., CLP - Law Offices of Joseph Bonanno; Kevin F. Clune, CLP - Clune & Company, LC; Lawrence LaChance - Bankers Capital; D. Paul Nibarger, CLP - Nibarger Associates; Vicki Shimkus, CLP - BSB Leasing; Chris Walker, CLP - GreatAmerica Leasing; Rosanne Wilson, CLP - 1st Independent Leasing, Inc.

laRkin joins BankeRs caPiTal as VP of The BRokeR DiVision

Mitch Larkin has joined Massachusetts-based Bankers Capital as vice president of the Broker Division.

Larkin brings more than three decades of leasing experience to his new role. He joins Bankers Capital from Madison Capital, where he served as VP of business development in the Lessor/Broker Division.

Larkin will work out of Bankers Capital’s newly established Maryland office with responsibilities including the purchase of individual transactions and portfolios from U.S.-based lessors and brokers.

Bankers Capital is a direct funding source specializing in B, C, D and structured story transactions ranging from $50,000 to $1.5 million.

members on the moveNational Equipment Finance Association

National Equipment Finance AssociationmaRlin Business seRVices announces TWo PRomoTions

Marlin Business Services has promoted Ray Shilling to vice president of sales and Ron Queen to vice president of credit.

Shilling joined Marlin in November of 2007 after spending sixteen years in the financial services industry including seven years at Advanta. He will continue to oversee the sales staff within the Office Equipment Group and recently assumed responsibility for Marlin’s Asset Management Operations.

Queen joined Marlin in June 1998 after graduating from Hampton University in Virginia with a degree in Economics. He began his career as an analyst, and was most recently director of credit for the Office Equipment Group. In his new role, Queen will continue to oversee the OEG credit group and will take over the management and oversight of credit operations for Marlin’s national retail channel group.

BalBoa caPiTal aDDs ThRee inDusTRy VeTeRans

Balboa Capital has added three industry veterans to its leasing staff. Tom Whalen, Chris Carpenter and Terry Vanwambeke have joined the company as part of Balboa’s efforts to increase its presence and penetration in the vendor space.

Whalen has 11 years of sales experience having held positions with Leaf Financial, Key Equipment Finance and HP Financial Services with a focus in the healthcare and IT vertical markets. Vanwambeke brings 10 years of credit and sales experience in the medium-duty and vocational vehicle markets with companies such as NBF Capital, Alamo Truck and Key Equipment Finance.

Carpenter bolsters Balboa’s healthcare reach after working for NEL and GE Capital/HPSC for the last 7 years.

“We enthusiastically welcome Tom, Terry and Chris to our growing Vendor Services Group,” said Phil Silva, Balboa’s president. “As the market has contracted, talented individuals are becoming available and

we intend to enhance our team as these quality individuals become available.

alTa gRouP names emea chaiRman

The Alta Group announced a managerial change in its EMEA Region. Derek Soper, the longstanding EMEA Chairman and architect of much of the region’s success over the last decade, stepped down as a principal and director on December 31. Soper will retain his connection with Alta by becoming an associate.

Soper is succeeded by Malcolm Ogle, who has been an Alta principal and director since 2001 and has more than 30 years’ leasing and asset finance experience. A former joint managing director of Lombard Corporate Finance, Ogle has also held a number of senior management positions with leading asset finance companies, including Rolls-Royce & Partners and PSA Finance PLC. He has established and managed businesses across Europe, working with a variety of global business partners.

“I am delighted to have been chosen to succeed Derek at a time when we see many opportunities to add value for our clients,” said Ogle.

leaseTeam aDDs To cusTomeR suPPoRT DePaRTmenT

LeaseTeam, Inc., a provider of end-to-end software for the equipment finance industry, recently appointed two professionals to the company’s customer support department.

Marci Tast has been appointed as manager of customer support. She will be responsible for leading the support of LeaseTeam products and services to ensure successful support of new and existing products, services revenue generation/growth, system performance and overall customer relationship management/satisfaction.

Van Wrenn has been promoted to manager of client services. He has worked with LeaseTeam for four years as an account manager. Wrenn is responsible for leading the implementation and

account management of LeaseTeam products and services to ensure successful implementation delivery, services revenue generation/growth, system performance and overall customer relationship management/satisfaction.

PRemieR lease & loan names senioR sales manageR

Premier Lease & Loan Services, a division of Great American Insurance Group, has hired Lisa Namdar as senior sales manager for the Commercial Equipment Leasing Group.

Namdar will be responsible for creating profitable growth by fostering relationships with Premier’s existing clients and by developing new business prospects for the company’s commercial insurance solutions.

Before joining Premier, Namdar spent 11 years with U.S. Bank Equipment Finance, where she managed its insurance program, focusing on the manufacturing and machine-tool industries.

“I was a client of Premier’s for two years, so in addition to my equipment finance and insurance background, I have a working knowledge of Premier’s products and services,” said Namdar. “I understand Premier’s products from the client’s point of view, which will help me better relate to our clients’ needs.

teChnOlOgY news

icon caPiTal selecTs leaseWaVe soluTion fRom oDessa Technologies

Leasing software provider Odessa Technologies said its LeaseWave lease management suite has been selected by ICON Capital.

ICON manages multiple equipment leasing funds that focus on mid- and large-ticket leases. Odessa will configure and customize the LeaseWave suite to automate, manage and complement ICON’s current operations and position the company for its future growth plans.

“When it came to automation we wanted a smooth well-integrated environment that was more process and system driven”, says Craig Jackson, senior vice president, ICON. “That’s why LeaseWave made perfect sense to us. It was the only system we found that provided the degree of flexibility and functionality we needed to manage our relatively complex business model. Odessa’s staff was

quick to understand our intricacies and demonstrated a practical ability to apply this knowledge through their system.”

neTsol Technologies Wins conTRacT fRom PakisTan hosPiTal

NetSol Technologies, a developer of enterprise application solutions, announced that its Asia-Pacific Division has won a contract to implement a Hospital Management System (HMS) with Maroof Hospital, a 200-bed general hospital being built in Islamabad that will offer advanced healthcare services.

The agreement is part of a $1 million technology investment by Maroof Hospital under which NetSol will customize, configure and implement the Maroof Hospital Management System software. The implementation is expected to begin in the current fiscal 2009 quarter, marking NetSol’s second major implementation of its HMS software since the platform was launched.

OtheR inDUstRY news

leaseTeam celeBRaTes 20-yeaR anniVeRsaRy

LeaseTeam, Inc., a provider of lease and loan software to the equipment finance industry, said it is celebrating its 20-year anniversary.

Since 1989 the company has provided equipment finance software solutions and services to companies throughout the United States and Canada. LeaseTeam’s integrated end-to-end solution is designed to allow equipment finance companies to manage transaction origination and portfolio management needs.

“We are proud to have been able to serve the equipment finance industry for the last 20 years and look forward with great excitement and hope to the next 20 years.” said Randy Haug, LeaseTeam executive vice president & founder.

Separately, LeaseTeam announced three recent Microsoft certifications.

The following three employees have successfully completed a 90-minute test to receive their Microsoft certifications: Account Managers, Mary Wysuph & Janice Bohling and Technical Support Specialist, Steve Craig.

leaf financial launches VaR financing PRogRam WiTh exTReme neTWoRks

LEAF Financial Corporation has entered

into a program agreement with Extreme Networks, a provider of converged Ethernet networks that support data, voice and video for enterprises and service providers.

The program provides U.S. channel partners who purchase from Extreme Networks distributors with the ability to acquire a wide array of financing options when purchasing Extreme Networks(R) Ethernet network solutions.

LEAF will offer Extreme Networks channel partners a full line of lease, loan and variable payment plans to extend to their customers. The program is designed to provide customers with financing solutions that help maximize their purchasing power and assist them to more easily meet their cash-flow requirements.

“In today’s environment it is beneficial that our channel partners have solid and flexible financing choices to extend to their customers and this is now available with this financing program,” said Christopher Rajiah, director of Extreme Networks North American Channel Partner Program. “Extreme Networks selected LEAF Financial Corporation due to its in-depth understanding of the technology marketplace and its extensive background of building manufacturer sponsored programs.”

enTeRPRise funDing RePoRTs exTension of loan agReemenT

Michigan-based equipment finance company Enterprise Funding Group reported that its lead bank has increased its monthly origination allocation and extended its revolving credit facility.

The bank’s commitment represents a 50% increase in Enterprise’s monthly liquidity and the additional funds will be used to purchase additional equipment leases and loans from its stable of brokers and leasing companies.

“The infusion of additional funding will go a long way to help us better serve our customers and eventually get back to business as usual”, said Mike Coon, executive vice president of Enterprise.

Enterprise said it is currently negotiating an additional lending facility, which it expects to close during the first quarter of 2009.

Enterprise Funding Group provides lending and leasing services to small- and medium-sized businesses across the country, with a focus on the construction, manufacturing, healthcare and selected service industries.



with Wells Fargo Foothill. They are an extremely professional organization with a long-term commitment to our industry. The addition of this line will position us to better execute on our business model for LEAF 4.”

LEAF is a commercial finance and equipment leasing company with approximately $1.6 billion in assets under management as of December 31, 2008.

aTel PRoViDes equiPmenT lease line To solaR Technology DeVeloPeR

ATEL Ventures, a provider of secured financing to emerging growth companies, is has committed $5 million in equipment lease financing to Canada’s 6N Silicon Inc., a developer of solar-grade silicon purification technology.

6N Silicon’s CEO, Paolo Maccario, said the financing will enable the company to continue expanding its operations to satisfy growing customer requirements.

“6N’s strong momentum and vision made it a compelling investment for ATEL,” said Steve Rea, executive vice president at ATEL Ventures, a division of ATEL Capital Group.

TigeR leasing enTeRs inTo PRogRam agReemenT WiTh PRessuRePRo

New York-based Tiger Leasing has entered into an agreement with Advantage PressurePro, a manufacturer and distributor of tire pressure monitoring systems and technology, to provide leasing options for its commercial tire pressure monitoring system customers.

“We provide the products, the benefits and the telematics contacts that are key in helping fleets flourish in this tough market. What we were missing was the piece that provides current and potential customers with a cost effective way to bring both our equipment, and the equipment of our partners, on board in a very low cost and attractive manner,” said Phillip Zaroor, president and CEO of PressurePro.

Advantage PressurePro, based in

aTel caPiTal & comeRica close cReDiT faciliTy

ATEL Capital Group and Comerica have amended and extended ATEL’s $75 million multi-purpose revolving credit facility thru June 2010.

The credit facility will be used to warehouse equipment leases and fund venture loans made by ATEL and its Capital Equipment and Growth Capital Funds as well as for general working capital purposes. The credit facility was syndicated with Comerica Bank as the lead bank and includes four other banks.

“I am pleased with the vote of confidence Comerica and our bank group has in ATEL extending this facility in a very tight credit market,” said Paritosh K. Choksi, ATEL chief operating officer.

Michael Silva Sr., VP of Comerica, added:

“On behalf of Comerica and the bank group, we have a very strong working relationship with ATEL and are pleased to extend and strengthen our decade long relationship.”

leaf financial enTeRs inTo $75 million cReDiT faciliTy WiTh Wells faRgo fooThill

LEAF Financial Corporation, the commercial finance subsidiary of Resource America, has entered into a new, three-year revolving $75 million credit facility with Wells Fargo Foothill.

The facility will support the activities of its public limited partnership, LEAF Equipment Finance Fund 4, L.P. (LEAF 4).

Crit DeMent, chairman and chief executive officer of LEAF, stated, “We are very pleased to enter into this relationship

iDc Black Book foRecasTs WoRlDWiDe iT sPenDing Will gRoW jusT 0.5% in 2009

The continued erosion of the global economy, including the prospect of negative GDP growth in many major countries, has led IDC to update its forecast for worldwide IT spending in 2009. The IDC Black Book now forecasts worldwide IT spending will grow by just 0.5% year over year in 2009 in constant currency, down from a November 2008 forecast of 2.6% growth. If recent exchange rate trends continue, this will translate into a significant decline in revenues for U.S.-based IT suppliers, IDC said.

The greatest impact will be felt in global hardware markets, where overall spending growth will be –3.6% this year, led by a steep decline in outlays for servers, PCs, and printers/MFPs. In contrast, worldwide spending on software and IT services are each expected to grow 3.4% in 2009, down from 4.6% and 3.7% growth respectively in the previous forecast. Worldwide IT spending in 2009 will be $1.44 trillion.

In the United States, IDC is now forecasting year-over-year growth of 0.1% in overall IT spending, down from the November forecast of 0.9% growth. Paralleling the worldwide market, hardware will experience a sharp decline in spending with –16% growth while software and IT services spending will grow by 4% and 3% respectively. U.S. IT spending will total nearly $491 billion in 2009. “Fourth quarter data from a number of key markets and geographies clearly shows that companies have been very quick to pull back their spending,” said John Gantz, chief research officer at IDC. “The data also provides a clearer picture of how companies are curbing their expenditures. Investments in software and services are being maintained in pursuit of productivity and efficiency gains while hardware spending is being slashed in an attempt to stretch refresh cycles and squeeze more out of existing assets.”

members on the moveNational Equipment Finance Association


Missouri, was launched in 1991 and began development and production of an external tire pressure monitoring system. The company distributes to several markets, including heavy duty (mining, logging, construction, agriculture), trucking, bus, RV, trailer and many specialized application markets.

nassau moVes To laRgeR sPace

Nassau Asset Management, a provider of full-service asset management to the equipment finance industry, has moved its Collections Division to a new facility at 100 Stonewall Boulevard in Wrentham, MA.

The company said the move to a larger space reflects the growing level of collections activity within Nassau’s overall equipment asset management operation, and the company’s commitment to meeting its customers’ needs in all phases of equipment leasing.

“Our mission remains focused on providing an efficient collection process that is transparent to our clients, resulting in cost effective recovery solutions and exceptional results,” said Dan Potts, vice president of receivables management. “Our new office will allow for resource growth, and enable us to build upon our successful operational design.”

“This move emphasizes Nassau’s commitment to the collections sector of the industry, as well as our determination to be a true, full-service company,” said Ed Castagna, president of Nassau Asset Management. “By being proficient in all phases of asset management, including collections, Nassau is able to work seamlessly with our clients to achieve their goals in a timely fashion, which is especially important in these challenging times.”

PORtFOliO aCQUisitiOns

leaf financial acquiRes PoRTfolio fRom sunBRiDge caPiTal

SunBridge Capital, a transportation and construction equipment finance company, has sold a portfolio of leases and leased assets to Philadelphia’s LEAF Financial Corporation, a subsidiary of Resource America Corporation.

The financial terms of the transaction were not made public. Fairview Advisors represented Sunbridge in the sale. Kansas-based SunBridge Capital services clients engaged in various industries ranging from local transportation to residential, commercial and roadway construction, to

waste management and others.

“We could not have completed this transaction without FairView,” said Adrian Weber, president & CEO of SunBridge Capital. “It was a complicated transaction, with multiple parties which needed to close before year end. Working around the clock, FairView assisted to complete the transaction New Year’s Eve. We hope that this is the first of several transactions of this type with FairView.”

inDUstRY eaRnings

leaf ReVenues, oPeRaTing income DoWn in fiRsT fiscal quaRTeR

Resource America, Inc. reported that its commercial finance subsidiary LEAF Financial Corporation’s revenues for the first fiscal quarter were $15.4 million, down 45% from $28.0 million reported for the same three months last year. Operating income of $7.9 million was down from $18.6 million or 57% from same fiscal quarter 2008. At December 31, 2008, assets under management were $1.6 billion, unchanged from the end of the same period in 2007. n



aBouT The auThoR

Christopher A. Enbom is the founder and CEO of Allegiant Partners Incorporated, a direct funding source for middle-market “story” credits. Allegiant sources all of its business from third

party sources. Mr. Enbom has spent over fifteen years in the leasing industry, both in Japan and in the San Francisco Bay Area. Before founding Allegiant Partners, Mr. Enbom was a Managing Director in the Structured Finance/Leasing Group at CIBC World Markets structuring, marketing and closing “big ticket” leases.

There are many articles in equipment finance periodicals regarding the current economic crisis and how to “weather the

storm”. Many have been very helpful to me as I help steer Allegiant Partners through the rough economic waters. There are certain aspects of survival I have not seen mentioned in periodicals or the press involving a leader’s state of mind that may be helpful to NEFA members and friends.

the Psychology of surviving a DownturnYou do not hear business leaders talking much about their feelings. The subject is taboo, but the navigation of emotions and the ego of business leaders/entrepreneurs is important in understanding who will survive a serious business downturn. I have been forced to make difficult decisions with regard to the economic downturn, many of which go against my nature and are emotionally very difficult.

entrepreneurs – good at growth, Bad at wielding an axeBy nature, most of us started companies in order to be part of the excitement of growth. Entrepreneurs, by and large, are optimistic risk takers who in many cases ignore the downside risks in order to focus on their dream of building a successful and profitable business. Those running companies are used to the banter of those around them telling them why they will

fail and ignoring such talk as they pursue their goals.

A year ago when many economists were stating “the sky is falling” how did most business leaders react? Most were concerned about a recession, but there were very few leaders who reacted fast enough. Reacting quickly enough over the past year and six months has required the ability to see a scenario that includes a significant degree of pessimism, a personality trait most entrepreneurs do not have.

I believe Allegiant has survived because we have always been more concerned about the preservation of our capital than the fast growth of our capital, and we have always taken both optimism and pessimism in the markets seriously. Last year at exactly this time I looked at the overhead structure of our company and the deteriorating economy and I started laying the groundwork to seriously cut expenses. In the case of Allegiant it meant people, some of whom had worked for 10 years and had helped start and even capitalize the company in times of need. Six months into our cost cutting we decided we needed to double the amount of cuts. Last month we decided we needed to cut again.

If we had not started cutting a year ago we would likely be out of business today. Making the cuts, however, has been the hardest job I have ever done. It means ending the livelihood of people for whom you care deeply, and also admitting to

yourself that times are bad. For me and for most entrepreneurs this is emotionally very difficult. Corporate leaders who were able to properly predict the pessimistic future and go against their emotions early by making difficult personnel decisions are now surviving. Those who did not are now in serious trouble or are already out of business.

Pretending to be an economist – Unleashing Your inner geekSurviving any business requires any business leader to be a geek about economics. When there was too much liquidity in the markets from 2005 to 2007,

tOUgh times anD Real emOtiOnsmaking the Right Decisions in Difficult times

There will be plenty of difficult times ahead, but it is important that we embrace these challenges we are facing and turn them into our next opportunities.

By chRis enBom

we shrunk our originations because we knew the entire industry was writing bad deals. Amongst other indicators, corporate bond spreads were near historic lows indicating too much liquidity in the debt markets. Last year we grew our originations by 20% as we were able to book much better transactions due to the lack of liquidity in the system. As bond spreads widen we generally see good opportunity.

The Federal Reserve Bank has a great deal of information about the state of the economy. There is information available on Bloomberg.com, WSJ.com and other financial sites. When corporate bond spreads are historically low it is not a good time to book new transactions, and when they are historically high (like today) it is a good time to book transactions. We also look at both the Federal Reserve Board’s projections regarding the economy and and projections from private economists, and we use this data when making our projections.

In most situations, common sense (rather than wishful thinking) will dictate staffing requirements. When the economy begins to shrink companies need to be ahead of the curve with expenses. As the economy begins to rebound firms that staff up properly to accommodate the growth will be the winners. Proper expense and staffing management is constant – it never stops.

get advice from smart People You trustReach out to bright people you know. Be honest with yourself and others regarding your financial situation. Listen, think and react to what others are telling you. Management requires seeing the obvious and reacting to it. When personalities and livelihoods are on the line the obvious often becomes obfuscated. People you know and trust will be able to help you navigate your emotions and make the right decisions.

go with Your gut, make a Decision and act on it QuicklyYou know in your gut if you need to make further cuts. Once you have made a decision regarding reductions, it needs to be done quickly. Delaying the inevitable is just jeopardizing the company. It seems so easy, but it is really difficult to do.

look at BenchmarksEvaluate your income statement and compare with others. Are your ratios in line? In our case, our gross margin was good but our expenses were higher than our peers. In good times you can survive high expense ratios but in hard times adjustments need to be made.

When GE made the announcement that it was shrinking its balance sheet and de-leveraging in order to keep its AAA credit rating, I studied the press release carefully. What do GE and Allegiant have in common? We both are independent leasing companies and we both borrow money. The demands on large companies always trickle down to small companies. I knew at that time that Allegiant would need to reduce leverage as well, and that companies who were not extremely conservative regarding leverage would not be able to raise capital at some point.

I am hopeful that the worst will be over for the equipment finance industry within a year. The steps that we all take over the next few months will separate the survivors from those who do not survive. We are doing everything in our power to be a survivor.

When all else fails I go back to the words my wife told me recently: “Chris, what is happening with the economy is beyond your control. Do what you can do and the rest is out of your hands.” n



This is the time to be your best. I don’t know about you, but I cannot be my best by doing some of the traditional and habitual things we Americans do. I am trying to be conscious of how I react to these troubling times. It is

normal and healthy to feel anger or outrage and to blame yourself for not getting out of an investment or closing a transaction. But it is not good to hang on to those feelings and put off making a plan for dealing with the situation.

We consider ourselves a culture that revels in its individuality. This is especially true in good times. When we fail, it is also an individual matter, although we may try to shift the blame to others. The blame game is easy to play. But we are not all innocent victims in most cases. While most of us won’t take responsibility for the Wall Street debacle, at some point we need to accept the situation and begin to deal with it. Anything from writing your congressman to creating a new personal or business strategy can help you get through it.

My first personal change is to reduce my dependence on traditional network news. The networks don’t believe we will take the time to watch a complete and balanced report. In an effort to boost declining ratings, they offer us only part of the story in easily digested snippets or they distort it with negative or sensational information. When is the last time you can remember that you couldn’t wait for the news to come back on after a commercial? It is more like “Oh no, what’s next?”

I want to challenge myself to deal in specifics. We have a tendency to speak in general terms and to make broad assumptions. This bad habit can be most costly in difficult times. An old professor of mine would strike through the text of a case study and add the comment “motherhood statement.” His meaning was clear: Quit making broad, meaningless statements and get to the heart of the matter when analyzing the case study.

what time is it?By jim meRRilees

This is the time to be your best. I don’t know about you, but I cannot be my best by doing some of the traditional and habitual things we Americans do. I am trying to be conscious of how I react to these troubling times.


a part of the community.

Years ago I wrote an article about the value of membership. I compared the dues paid for the association to insurance premiums. You write the check, and although I hope you get immediate value, you may just forget about it for a while until a specific event such as a conference or class occurs.

I reflected on what my dues (premium) do for me. I decided that the dues and conference fees are my policy to ensure (insure) my future and protect me from getting behind in a very fast-paced business world. Many great ideas that have made or saved me money have been gained through networking.

Now is the time for you to file your claim. At this time in our history, we need each other more than ever. That’s what time it is!

P.S. – As a 2009 Director of NEFA, I offer this pledge: If you contact me, I will guarantee you an idea to either earn or save you money in 2009. This is my commitment to you, and it is another reason why it makes sense to associate with NEFA. n

avid reader and usually reads about one book per week? Our local book store knows her well. This was a triple victory. I spent money I had no plans to spend, so the economy won. My wife was happy because she can travel anywhere with multiple books without the extra weight. I was very happy because the cost is usually lower for an eBook, and there are fewer stacks of books in my home!

Business cycles are inevitable for many reasons. It will take a community effort to fix the trouble we are in. It starts with a single decision to do something, but you will need help. Maybe the help will come from a new funding relationship or from new markets that are less affected by the recession. No matter, business opportunities do exist.

The new administration seems to get one thing: Work with people from different backgrounds to get their input. Regardless of your politics, we can all agree on the need to communicate thoroughly and to involve all the stakeholders. This sets a great example for our industry and association. We need to come together to review where we are and to decide how to get out of this downward spiral. You can’t do it alone, and you need other perspectives. There is no better time to be

Now is the time to closely examine how you will change your strategy for success. Start by getting through the passive, helpless feelings and develop specific actions to take each day. Change from being a cynic to being a skeptic. Cynicism wastes energy, but skepticism can keep you sharp. Once your psyche is adjusted, change is possible. I have never witnessed an economic recovery where the mindset was weak or the spirit was unwilling. Don’t shoulder the responsibility for things you didn’t do, but do take responsibility for what you can do. Did you make that extra call or two? Have you stayed in touch with your existing customers and industry contacts? Clean up your act and look at how you can be more efficient in all your processes.

On my return trip from the first NEFA board meeting in January, I passed through a shop in the airport. As I was looking at a new eBook reader, the salesman began to explain the benefits of the item and how it compared to the competition. I said, “Well, I am familiar with it and the cost and will probably make a decision at home in Oregon, where there is no sales tax, after I have compared pricing.” Without hesitation, he let me know that although some companies had a system to waive the tax, he did not. However, they did have a sale on, plus a further discount if I purchased one other item. He also told me a newer version was coming out soon and what enhancements it had (weaker sales people would not have even mentioned a new model). I was dealing with a superb salesman. He went on to explain the features and compared them to the competitive product. In short, I went away with a bag of goodies and got a great value. Even though the price was comparable to a discount store, I measured the value in the knowledge he had about the product and the way he imparted that knowledge to me. Did I mention the eBook reader was for my wife, who is an

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aBouT The auThoR

James K. Merrilees, CLP is the current President of Quiktrak, Inc. an eighteen year service provider to the leasing/finance industry. Mr. Merrilees has thirty-four years of professional experience in the commercial leasing industry. Mr. Merrilees

was President of Colonial Pacific Leasing from 1989 to 1994. He has held senior management positions in the leasing industry and related businesses for the past twenty eight years. At present Mr. Merrilees is a NEFA Director.


In these difficult economic times, well-drafted guaranties are a hedge against a borrower’s bankruptcy filing or the return of damaged collateral. Under a

properly crafted guaranty, guarantors may have fewer defenses than the borrower or lessee and in some jurisdictions may be subject to longer statutes of limitations than the actual borrower or lessee.

Rule of thumb: the Broader the BetterThe goal is to make certain that your guaranties cover as many obligations, existing or future, as possible. As a first step, make sure your guaranties are “continuing” guaranties. Continuing guaranties specify that the guaranty applies to all the “now existing or thereafter created” obligations of the obligor. A continuing guaranty guaranties payment not only of any loan/lease transaction entered into contemporaneously with the guaranty, but also covers both prior or subsequent advances of funds. For example, if Mr. A guaranties

the debt of ABC, Inc., “now existing or hereafter created, unconditionally and continuously,” on January 1, 1996, and the creditor makes a further extension of credit in February of 1997, Mr. A will be obligated and have personally guaranteed this 1997 debt also, unless he had, in writing, revoked his guaranty prior to the February 1997 advance of credit. Moreover, Mr. A will also be personally liable under his guaranty for a debt of ABC incurred prior to execution of the guaranty, in 1995!

As a second step, include language that covers “all indebtedness, whether direct or indirect, primary or secondary.” Some courts have held that broadly worded guaranties cover not only all the obligor’s direct obligations, but also the obligor’s secondary and contingent obligations. Thus, a guarantor may be held to have guaranteed the obligor’s guaranties of a third-party company or individual. For example, if A guaranties the debt of ABC, Inc., and ABC, Inc. guaranties the debt of XYZ, Inc., Mr. A may be liable for not only ABC, Inc.’s debts, but those of XYZ, Inc. as well.

Creditors should carefully review all guaranties to confirm that they are as broadly drafted as possible and examine their internal practices to incorporate notarization and written ratifications.

By fRank PeReToRe, esq. anD fReDDa kaTcoff, esq.

winning gUaRanties

legal line


a guaranty of payment, and an absolute and unconditional guaranty will preclude a defense based on failure to perfect a lien, with resulting impairment to the collateral. Lack of consideration will also not be an effective defense since little, if any, consideration separate from the primary transaction is required.

include merger ClausesFraud claims may be barred by the parol evidence rule. An example is Korea Exchange Bank v. A.A. Trading Co., 8 A.D.3d 344, 345, 777 N.Y.S.2d 736, 737

the commercial reasonableness of their actions. A guarantor who waives all defenses may be found fully liable on the guaranty upon a creditor’s merely proving “...an absolute and unconditional guaranty, the underlying debt, and the guarantor’s failure to perform under the guaranty.” The guarantor may be barred from raising virtually all defenses other than payment and failure to conduct a commercially reasonable sale, including defenses of fraud in the inducement and lack of consideration. A defense based on failure to pursue the collateral or other guarantors will not prevail under

“The general rule is that a comprehensive guaranty of debts covers both the primary and secondary liability of the principal.” A guaranty of “indebtedness, liabilities and obligations of every nature and kind” and “every balance and part thereof,” past, present or future, and with “NO LIMIT” was held to extended to apply to a guaranty executed by a principal. A guaranty of “all indebtedness” of son-in-law, “direct or indirect, absolute or contingent” was held to encompass obligations under principal’s guaranty; a guaranty of any and all indebtedness, obligations and liabilities (whether direct or contingent or now or hereafter due or now or hereafter incurred) was held to cover a corporate guaranty; a guaranty of all obligations, “direct and indirect,” was held sufficient to apply to the second obligation of the debtor; and a guaranty of any and all indebtedness and liability of every kind, nature and character was held to encompasses secondary liability of principal.

Jettison guaranties of CollectionUnlike a guaranty of payment in which the guarantor generally accepts an unconditional obligation to pay the debt, a guaranty of collection requires a creditor to pursue and exhaust all remedies before pursuing the guarantor. Thus, if there is collateral involved, the creditor must fully pursue the collateral before seeking to recover from the guarantor. Guaranties of collection are, therefore, often cumbersome to enforce. Under a guaranty of payment, the creditor has no obligation to pursue other remedies, including the collateral or the obligor, but can pursue a particular guarantor that is affluent or that is otherwise an easy target.

Draft encompassing waiver Of Defense Clauses Include language making the guaranty an “absolute and unconditional” guaranty of payment. Also include encompassing language that waives defenses, referring to each potential defense as specifically as possible. In general, a guarantor who has waived defenses in the guaranty instrument cannot rely on the defenses that were waived to defeat summary judgment. There are critical exceptions to this rule, since a guarantor cannot waive the right to contest the commercial reasonableness of any disposition of the collateral or, prior to default, waive the right to receive notice of sale, which means creditors must respond to any challenge by demonstrating

(2d Dep’t. 2004). In that case a guarantor claimed that he was told by the plaintiff’s representative that the execution of the guaranty was a mere formality and he would not be responsible for the underlying debt was not a sufficient defense. The Court granted summary judgment in favor of the plaintiff bank, stating, “If such an oral assurance was made, then it not only varied the terms of the guaranty, but amounted to a promise that the guaranty would not be enforced. ‘To recognize that such an oral assurance could constitute a defense to this action would violate the parol evidence rule’.” In the same vein

is National Bank of North America v. Around the Clock Truck Service, Inc., 58 Misc.2d 660, 661, 296 N.Y.S.2d 606, 607 (Nassau Co. 1968) in which a guarantor attempted to repudiate his guaranty, claiming that the borrower had told him in the presence of bank officers that the guaranty was a mere formality and that he would in no manner be held liable. The Court granted summary judgment to the bank, holding that the guarantor was “estopped by public policy from asserting that the parties agreed that the instrument should not be enforced.” See also, Citizens Banking Co. v. McKittrick, 1991 WL

79153, 1 -2 (S.D.N.Y. 1991)(granting summary judgment against guarantor who claimed that it was his understanding that the guaranty was a mere formality, that the bank would be looking solely to the notes of the limited partners for repayment, and that the bank advised him not to be concerned). A merger clause that provides that the guaranty is an integrated agreement and represents the final expression of the parties’ agreement strengthens the operation of the parol evidence rule to bar claims of pre-execution misrepresentations and side agreements.

say Yes to notarizationDesperate times call for desperate measures, and the sinking economy has encouraged an upsurge in claims of forged guaranties. Notarization is one way to protect against authenticity issues because some states attach a presumption of validity to a notarized signature. If the signature is not notarized, the creditor should verify that it has in its file the guarantor’s social security number or copies of the guarantor’s license or photo-identification. Personal information in the creditor’s possession may persuade the court that the defendant is not a stranger to the transaction but, indeed, the individual who executed the guaranty. Failing these strategies, the creditor may be able to authenticate the signature by use of a handwriting expert or by testimony from lay witnesses familiar with the defendant’s handwriting. Additionally, be sure that upon execution of any lease or loan modification or extension, guarantors sign written ratifications of their guaranties. A written ratification affirming the guaranty limits claims by guarantors that the modification or extension released them from the guaranty (a result that is also achieved by including language in the guaranty specifying that a modification or extension will not constitute a release), but will make it more difficult for a guarantor to argue fraud or forgery later on if he has signed a written guaranty with knowledge of the fraud or forgery and accepted the benefits of the transaction.

Guarantors will also sometimes argue that they did not understand they were signing a personal guaranty. Many courts reject this argument on the basis that parties are presumed to have read and understood any document that they signed. This result applies even when the executing party claims to be unable to read English. The opportunity to have read the document, moreover, will overcome the reliance prong of a fraud contention.

18 newsline | MARCH/APRIL 200918 newsline | MARCH/APRIL 2009


of in a motion for summary judgment. OrixCredit Alliance,

Inc. v. Fan Sy Productions,215 A.D. 2d 113, 625 N.Y.S.2d

910 (1st Dep’t. 1995). The presumption can be rebutted with

expert testimony or lay testimony disputing the signature and

evidence of the actual signature. Brown v. Ames, 201 F.3d

654 (5th Cir. 2000).

Fleming Companies, Inc. v. Thriftway Medford Lakes, Inc.

913 F.Supp. 837, 843 (D.N.J. 1995); Daniel Gale Associates,

Inc. v. Hillcrest Estates, Ltd., 283 A.D.2d 386, 724 N.Y.S.2d

201 (2d Dep’t 2001)(Defendant claimed he did not read

contract.).

Shklovsky v. Kahn, 273 A.D.2d 371, 709 N.Y.S. 2d 208

(2d Dep’t 2000); Sofio v. Hughes, 162 A.D.2d 717, 556

N.Y.S.2d 717 (2d Dep’t 1990).

Parrish v. Jackson W. Jones, P.C., 278 Ga. App. 645, 649,

629 S.E.2d 468 (2006).

UCC §§ 9-602(7) and 9-624(a) and (b)(2005). See also, Key Equipment Finance Inc. v. Zip, 2007 U.S. Dist. LEXIS 38700 (N.D.N.Y. 2007).

City of New York v. Clarose Cinema Corp., 256 A.D. 2d 69, 681 N.Y.S. 2d 251, 253 (App. Div. 1st Dep’t. 1998).

Citibank, N.A. v. Plapinger, 485 N.E. 2d 974, 495 N.Y.S. 2d 309, 66 N.Y. 2d 90 (1985); Marine Midland Bank, N.A. v. Walsh, 260 A.D. 2d 990, 689 N.Y.S. 2d 288 (3d Dep’t 1999).

Walter E. Heller & Co. v. Cox, 343 F. Supp. 519, 526, aff’d, 486 F.2d 1398 (S.D.N.Y. 1972).

See generally, 38 Am. Jur. 2d Guaranty, Section 401 (2d ed. 1999).

Mace v. Cardone, 35 Misc. 2d 163, 232 N.Y.S 2d 279 (1962)(“[T]he certificate of the notary public should have been received as presumptive evidence of the facts contained in such certificate.”). This issue may properly be disposed

ConclusionCreditors should carefully review all guaranties to confirm that they are as broadly drafted as possible and examine their internal practices to incorporate notarization and written ratifications. A guaranty may be enforceable even when the primary loan or lease is not. Make guaranties a winning enforcement tool. n

Restatement (3d) of Suretyship and Guaranty, Section 16 (1996).

Empire Bank v. Bam Const., Inc., 607 S.W.2d 227, 228 (Mo.App. S.D. 1980)

See also, International Multifoods Corp. v. D & M Feed & Produce, Inc., 470 F.Supp. 654 (D. Neb. 1979)

Harris Trust and Sav. Bank v. Stephans, 97 Ill.App.3d 683, 690, 422 N.E.2d 1136, 1141, 52 Ill.Dec. 927, 932 (1981)

Booth v. Irving Nat. Exch. Bank, 82 A. 652, 653 (Md. 1911)

Fannin State Bank v. Grossman, 30 Ill.App.2d 484, 486, 175 N.E.2d 268, 269 (1961)

Perry Drug Stores v. N.P. Holding Corp., 2007 U.S. App. LEXIS (6th Cir. 2007) (under guaranty of collection, creditor must first sue primary obligor). See generally, 38 Am. Jur. 2d Guaranty Section 106 (2d ed. 1999).

In re Ransdell, 1998 Bankr. LEXIS 937 (Bankr. E.D.N.C. 1998). See generally, 38 Am. Jur. 2d Guaranty, Section 106 (2d ed. 1999).

Federal Deposit Insurance Corporation v. Schwartz, 78 A.D. 2d 867, 432 N.Y.S. 2d 899 (2d Dep’t 1980); Milliken & Co. v. Stewart, 182 A.D. 2d 385, 582 N.Y.S. 2d 127 (1st Dep’t 1992).

National Westminster Bank PLC v. Empire Energy Management Systems, Inc. , 1998 WL 47830, 3 (S.D.N.Y. 1998)

aBouT The auThoRs

Frank Peretore, Esq. is a founding partner of the law firm of Peretore & Peretore, P.C. with offices located in both New Jersey and New York. He is a Georgetown Law graduate with over 20 years experience in representing national and regional financial institutions and lessors from the transactional and financing stage throughout the litigation

stage in the state, federal and bankruptcy courts. If you have any questions or would like to contact him, please call (973) 729-8991.

Fredda Katcoff, Esq. is counsel to Peretore & Peretore, P.C. Katcoff is a graduate of Harvard College and Columbia Law School and specializes in complex civil litigation and appellate practice.


As everyone is painfully aware – the last six months in the equipment leasing and finance sector have been some of the

toughest times we have ever experienced in our history. No one could have predicted the challenges that these economic times would present or the severity of the rapid deterioration of the financial services industry. It is times like these that make our trade associations more valuable to us than ever before.

“Keeping in touch”I have always believed in the critical role associations have played in the development of my company. As a small business owner – connecting to the industry and those who had achieved success in our field was paramount in terms of giving me a guidepost. In times of hardship – success becomes elusive – the transactions don’t flow as they did. I find that my time spent networking and attending conferences is quite critical. I think it helps to understand what others face and the solutions they craft for the navigation of these waters.

I have always taken away from every meeting I attend an idea or two that has helped me to grow/focus my business. The seismic changes in the market are forcing everyone in the industry to change to meet the needs of the market. To live in a vacuum of information at a time such as this could be downright dangerous. Being away from industry resources for even a brief time could mean the difference between being here in 6 months or not. Our industry carries a diverse and entrepreneurial membership. It is exactly these qualities that create a broad spectrum of learning and networking opportunities. I think it is fair to say that no two members approach the market or manage their businesses in the same way. That diversity is what keeps our associations alive with new ideas, innovation and energy!! Take advantage of the industry knowledge and perspective that comprise the heart of our associations.

FundingYes – funding opportunities. Funding is a key factor in the success stories of those

who are actively engaged in the market. As we all know – these relationships are critical to our survival. What better way to learn of product and overall credit philosophy revisions than to attend a meeting and/or review the latest thoughts in the newsletters and magazines. There are new sources of capital emerging every month. I have noticed activity recently from newer sources who are evaluating market opportunities in our industry. These sources view our associations as a storehouse of information and contacts. As always, new opportunities are attracted to those who represent the experience and depth of contacts that those who belong to and are active in associations afford. New opportunities will present themselves – but only to those that are “out there” looking for the next wave and who have taken the time to demonstrate their commitment to the equipment leasing and finance business. Membership in the associations shows your commitment to the principles of ethical business conduct and transparency of dealings. Qualities that are a “must” on the path of success.

This is not a time to go it alone… Sure times are challenging … but membership and involvement in your trade associations are more important than ever!

By ValeRie hayes jesTeR

no time to “hunker Down”

NEFA FUNDINGSYMPOSIUM

Fall 2009


September 23 – 27, 2009Monterey Marriott, California

Visit nefassociation.org for more information


aBouT The auThoR

Valerie Jester is President of Brandywine Capital Associates, Inc. She has over 27 years experience in the equipment leasing and finance industry. She currently serves on the Board of Directors of the National Equipment and Finance Association. She has also been involved with the Equipment Leasing and Finance Association of America for the past 19 years, most recently as Chairman of the Association. She also served on the Board of Directors of the

Eastern Association of Equipment Lessors and as a member of the Ethics committee of the United Association of Equipment Leasing.

advocacy

Did you know -

• Equipment leasing and finance accounts for nearly $650 billion in capital equipment expenditure.

• Leasing and finance contributes as much as 3% of real GDP annually.

• Each day, 20,000 equipment leases are written.

• Eight out of ten U.S. companies lease and finance all or some of their equipment.

• Small businesses are twice as likely to lease or finance their equipment as to purchase it outright.

• More that 250,000 Americans are employed in the equipment leasing and finance industry.

• Each $1 billion spent on leased equipment creates an estimated 30,000 jobs in the U.S.

*courtesy of the ELFA’s 2008 annual report.

Given these statistics, our industry stands poised to benefit from the stimulus packages recently passed into law. Helping to create the awareness at all levels of the role we play in financing the supply chain of America is vital to any economic recovery. Membership in our association demonstrates your organization’s commitment to self-regulation, prudent business practices and above-all to a strong code of ethics. In our ever increasingly transparent world, these connections become of paramount importance as we demonstrate an understanding of our value in the economics of American business. As Ken Bentsen, ELFA’s President, has said, “We risk being misunderstood or, worse, being completely missed.” You cannot afford to be off the radar screen at this critical time.

VolunteerismTrade associations are most valuable to their members during times of great change.

Now is the time to go the extra step and challenge yourself to truly participate in your trade associations. During this time of recession why not decide to give more? Join a committee, a Board, write an article, plan a conference, volunteer to speak or chair a panel? Now is the time to give more. I feel comfortable in agreeing with the thought that our industry is going through a massive reshaping or “restart” if you will. What better time to give your input and counsel as we as an industry grapple with our new direction. Your time and membership make a large difference in the development of our future. n


Much has been written about the current state of our industry. However, I would like to turn our attention toward the future. There is plenty of business for those who are willing to work harder

and smarter in this “New Economy”. The question may be: Where does one turn to gain the knowledge required to work smarter? Many of the lessons from the past are good lessons for the future. There are many veterans in this industry who possess valuable information about how our industry has redefined itself and has been creative in order to navigate the turbulent challenges of the past. Therefore, I strongly suggest to relatively newer entrepreneurs, lease originators, and brokers to seek out leasing mentors with experience and knowledge about days gone by.

It’s been the running joke in our industry for quite some time that our industry is balding and graying quickly. Many of these valuable industry assets are retiring and leaving the industry (others may want to leave, but have been forced to sign on for a few more years in order to rebuild faltering portfolios). The fact remains that these valuable assets are available to assist younger, up and coming professionals who want to tap into their experience and know how. Over my career I have had several mentors, some were better than others. All of my past mentors had a tremendous amount of leasing knowledge and were willing to share their past experience to help me formulate my future. Even today I find myself calling my mentors of years past (some of these individuals have been out of the business for many years) to share with them current challenges and to seek out their valuable advice.

My first mentor in the leasing industry, more than twenty five years ago, claimed that eighty percent of what one needs to know in our industry can be learned in six months and that the remaining twenty percent may take a lifetime. The remaining twenty percent is what separates the men from the boys (or women from girls). My mentor also claimed that the last twenty percent of knowledge is what makes this business fun; it is where all of the money is made. The last twenty percent of the knowledge cannot be learned in books or manuals. This knowledge is gained through engaging oneself into the market, pounding the pavement, and listening to your lessees, your co-workers, your competitors and your funding sources. I learned much of the “last” twenty percent from this mentor because he was willing to share his wisdom. The “last” twenty percent is where the real change occurs. Those professionals who embrace change are the ones who formulate the information and knowledge that is needed to drive this industry forward.

Now is the time for all of us to commit to one another and our industry, to share our experience from the past and to help formulate our collective future. Those of us who are relatively

new in the industry or even just in need of a helping hand need to reach out to the more experienced professional and develop a mentor relationship. Those who are more experienced need to offer helping assistance to individuals with lesser knowledge, because they are the future of our industry. Mentoring is a two way street and all of the participants mutually benefit from these meaningful relationships.

One of the best places to build mentoring relationships is to attend NEFA events – both regional meetings and national conferences. The members of NEFA are some of the most talented, knowledgeable individuals involved in our industry. A short conversation in the hallway may develop into a mentoring relationship which will allow you to increase your leasing knowledge, to increase your income, to become a better leasing professional.

Your future will be brighter if you establish a meaningful mentoring relationship with another NEFA member. n

Many of the lessons from the past are good lessons for the future. There are many veterans in this industry who possess valuable information about how our industry has redefined itself and has been creative in order to navigate the turbulent challenges of the past.

By scoTT WheeleR

it’s time to mentorBRokeR line

aBouT The auThoR

Scott A. Wheeler, CLP has been in the commercial equipment industry since 1982. With over twenty-six years of leasing experience and an Executive Masters in Business Administration, Scott is an accomplished senior leasing executive with leadership qualities in marketing and operations. Scott is currently the president of Wheeler Business Consulting LLC; providing extensive experience to organizations looking to reach a higher level of

profitability and corporate development. Scott was active with EAEL since 1989 and is a current board member of NEFA.


With every phase of the economy, there are positives and negatives. The seasoned sales professional and sales

manager look for the silver lining and consider the negatives as challenges to be overturned into opportunities. Today credit is tighter and cost of money is up, and consequently there is not a better time to shore up the profit side of the equation.

What can be done and where are those pockets of opportunity? As much as managers and sales professionals are looking for the magic bullet, there isn’t one and there never has been one. What this article highlights is one of a series of tactics that can be employed to focus on the bottom-line, which will translate into higher commissions.

Resetting goalsOf all of the disciplines in a company, nowhere are goals more important than in sales. Without proper goal setting the sales professional does not have a target to strive for and to focus their efforts. Today many leasing companies are faced with increased cost of funds, tighter credit parameters, and limited or shrinking capital to lend. This is the time to reset goals for the bottom-line or profit number. If the sales volume number is going to stay relatively flat and we want to ensure we are making as much or more money than in previous years, then we must focus on increasing margins.

For the sales manager, this means sitting

with the sales team and setting new profit goals and ensuring that the compensation plan rewards that behaviour. And of course it is always a great idea to have two levels of sales goals, the “take to the board” goals, and the stretch goals.

the OpportunityThis sounds initially like a negative but in fact it is a tremendous opportunity. This is like cleaning out that closet that is poorly organized and filled with worn-out items. Review all of your vendor or dealer accounts and decide which ones you can no longer do business with, or at least will no longer spend time servicing. This will free up precious sales time to focus on profitable business.

Boosting sales Profit in a Down economy

With every phase of the economy, there are positives and negatives. The seasoned sales professional and sales manager look for the silver lining and consider the negatives as challenges to be overturned

into opportunities. This article highlights a series of tactics that can be employed to focus on the bottom-line, which will translate into higher commissions.

By muRRay DeRRaugh

the ProblemThis is always the most controversial tactic with sales professionals, having them face reality that some of their accounts have to be cut off, or at least less time spent on them. Here is the challenge, in good times business flows in and sales volumes are such that the profit margin becomes secondary. The leasing company has a seemingly endless supply of money and everyone is making a good living. The problem with that thinking is that we are not doing a good job of qualifying our prospects and ensuring we are selling at the right price. When vendors or dealers have numerous options to fund their client’s leases, we are more reluctant to push for the right pricing. We tend to settle for shaving margin to get the vendor or dealer’s business.

the solutionIn a down economy, the vendor and the lessee have less choice. In order for your company to stay in business you need a certain margin and should not be writing deals below that margin. So the exercise is this. Review each vendor relationship and ask yourself the following questions:

What is the approval percentage of this vendor?

What is the closing percentage of approved business to funded leases?

What is the average margin for this vendor?

What is the time commitment and true cost of servicing this vendor?

Is this vendor relationship in good alignment with the company’s credit appetite and profit targets?

Once you have those answers, determine what your averages are for each of these components and ask yourself one final question before proceeding, “Will this average get me to my new profit margin target?” If the answer is yes, then compare each vendor to your average vendor. Which vendors are above the line and which ones are below? Of the ones that are below, can the approval percentage be increased, can the closing percentage be increased and can the profit margin be increased to at least the average within a 90-day period? Balance that off with the time and cost required to service that vendor.

This all sounds straightforward and simple to implement, however the real challenge is executing the plan. This takes commitment from the sales force and must be enforced by senior management and executed by the sales manager. Shutting off resources to an active account is not easy but necessary. The sales manager must be diligent and ensure that only accounts meeting and exceeding the profit targets remain. n


aBouT The auThoR

Murray Derraugh is a Senior Vice President with Swandel and Associates. Derraugh has several years of senior management experience running leasing and finance companies, has designed education and training programs for Canadian and United States based lease and finance associations and specialized sales training programs for lessors, and advised companies on areas of income optimization and expense reduction. Swandel and Associates is a

management consulting firm specializing in the equipment and vehicle lease and finance market. Swandel and Associates represents Kropschot Financial Services in Canada for Mergers & Acquisitions. Visit our website at www.swandelandassociates.com or call us at 204-477-0703.


tidbitsNational Equipment Finance Association

National Equipment Finance AssociationneFa KiCKs OFF 2009 RegiOnal meetings in atlanta By Doug Welch

January 14, 2009

Forty five lessors, brokers and service providers found their way to Ansley Golf Club in midtown Atlanta to network and enjoy lunch. This regional meeting has been taking place for the last several years under the EAEL

banner. Our invitee data base has grown to over 150 people. The buffet lunch has been held quarterly and has drawn an average attendance of 20 to 25 people. We coordinated our January meeting with the NEFA Board meetings being held in Atlanta. Consequently, NEFA’s two Membership Directors, Alison Pryor and Joe Woodley were able to attend the lunch. Several Board Members were also in attendance – Brent Hall, Bruce Winter and Scott Wheeler. And, from NEFA’s management company, Meeting Expectations, two people our membership will come to know well, Steven Hughes and Kali Lack, attended the meeting.

The emphasis at the Atlanta meetings has always been networking. The gathering began with 30 minutes of mingling before we sat down to lunch and more conversation. After lunch, we individually stood for formal inductions. And, before adjourning, we were treated to some special Oregon chocolate bars flown in by Alan Zeppenfeld of Portfolio Financial Servicing Company. Thanks Zep!

Given the business challenges we are all facing, there has never been a more important time for us to meet, network and exchange ideas. As NEFA members, please take a few minutes to consult our website www.nefassociation.org for regional meetings convenient to you. You can register and pay for these meetings on line through the website. We look forward to seeing you in Atlanta and other regional meetings.


COmmittee UPDate: memBeRshiP

Real solutions to everyday ChallengesBy scoTT WheeleR

As Chairman of the membership committee, I am often asked - what are the greatest benefits of being a member of the National Equipment Finance Association (NEFA). My initial reaction is that your greatest benefits can only be realized when you become involved and engaged with the association. However, upon joining the NEFA the return on your investment will be quickly realized. Every event offers multiple opportunities to learn from others and to share experiences with peers who are able to advise and suggest real solutions to everyday challenges.

The leadership of two strong associations had the visionary insight to work diligently over the past two years to combine UAEL and EAEL into National Equipment Finance Association. As a past member of EAEL, I have already seen many new benefits and opportunities with the national focus of our organization. I have met many new professionals and see how in today’s business environment our national presence and desire to provide superior regional and national events will create additional value for all members, no matter what their connection may be to our dynamic and ever changing industry. As a member of our newly created association, we can be instrumental in formulating the future of our companies, our association and our industry. The board members have personally dedicated significant time and effort in building a strong foundation for the organization; and have accomplished a great deal of work in a relatively short period of time. However, the work thus far is only a foundation. The future of our organization will be shaped by the members who are engaged in the association by attending, planning and participating in multiple events both locally and nationally. With the current challenges in the economy it is more important than ever to engage with others who are knowledgeable and committed to our industry. The members of NEFA are influential and dominant players in the industry – individuals who will shape the future of our businesses.

I have spoken to most of our newest members and the common factor in their decision to join NEFA is to gain a greater competitive advantage in the market. Knowledge is power in the market. NEFA is committed to avail its members to relevant workshops related to current subjects that are most important to its members’ needs. In order to stay in front of the market, members are able to meet and discuss concerns and opportunities at regional meetings throughout the country. Each event provides the opportunity to ascertain information which will lead to additional business, more profit and improved professional services for your clients.

New relationships within NEFA allow members to build an automatic resource department. Our members are diverse and experienced in all facets of our industry. Our members are confident that the most viable solutions will be created and

geORge a. PaRKeRleasing technologies international, inc.

George is one of three co-founders of Leasing Technologies International, Inc (LTI), along with Jerry Sprole, CEO and Arnie Hoegler, EVP. He is presently Executive Vice President where he serves as the Chief Financial Officer and oversees the company’s marketing functions. He has been active in the equipment financing industry for over 25 years. Parker currently serves on the Board of Directors of the

National Equipment Finance Association (NEFA) serving as Treasurer and as a member of the Executive Committee.

Prior to his role with NEFA, Parker was active in the EAEL for over 10 years, serving on numerous panels and committees. During that time, he served on EAEL’s Sponsorship, Membership, and Conference committees (as a co-chair and chair).

In 2004, Parker joined the EAEL board, serving as Treasurer and member of the Executive Committee from 2006-2008. In 2007, he served on the Merger Task Force to explore a possible merger with UAEL. His role on the committee was to analyze membership, programming and financial data to determine synergies between the two associations, to conduct a market analysis of the leading leasing associations to ascertain the strengths and weaknesses of both associations, and to help formulate a strong value proposition for a merged association. His other major role on this committee was to draft and complete the Final Merger Recommendation and Plan to be submitted to both association boards for approval.

After the decision to merge, Parker continued to serve on the Merger Task Force to help form the new merged association and make it operational. He worked on many organizational tasks including: evaluating and selecting an association management company (leading to the selection of Meeting Expectations Inc.), reviewing and negotiating the management contracts, drafting and establishing the 2009 operating budget, setting up a new accounting system for NEFA, putting financial controls in place, establishing new bank operating and investment accounts, establishing merchant credit card accounts, assisting in selecting NEFA’s first board of directors, assisting in the wind-down of EAEL, and developing a working budget for NEFA’s first Spring Summit.

Volunteer of the Month

offered by the dynamic members of our association. They believe that their involvement with other highly professional industry leaders will insure their personal success.

The benefits of membership in NEFA are limitless. An association is as strong as its members. The attributes of NEFA members are significantly powerful and continuously expanding as members offer their superior services to the market.


tidbitsNational Equipment Finance Association


Please check www.nefassociation.org for more information and new events.

aPRil 2009the national equipment Finance summit – spring 2009April 4-7, 2009 Hilton, WALT DISNEY WORLD® ResortOrlando, Florida

atlanta Regional luncheonWednesday, April 8, 200912:00 p.m. – 2:00 p.m.Ansley Golf ClubAtlanta, Georgia

JUne 2009atlanta Regional luncheonWednesday, June 10, 200912:00 p.m. – 2:00 p.m.Ansley Golf ClubAtlanta, Georgia

sePtemBeR 20092009 Fall Conference September 23-27, 2009Monterey, CaliforniaOctober 2009

OCtOBeR 2009atlanta Regional luncheonWednesday, October 14, 200912:00 p.m. – 2:00 p.m.Ansley Golf ClubAtlanta, Georgia

nOVemBeR 20092009 super Regional ConferenceMonday, November 9, 2009New Jersey

2009 CalenDaR OF eVents

Regional Committee UpdateBy chRis WalkeR

The Regional Committee is responsible for organizing regional and local meetings for networking, socializing and educating NEFA members. These gatherings are the very fiber of our organization and a special part of the UAEL and EAEL legacy. Your Regional Committee is committed to carrying on the tradition of these legendary gatherings. A complete list can be found on the NEFA web site under the Networking and Events tab. Be sure to check often because new events are being added frequently.

Since most of us are familiar with either UAEL or EAEL, we thought you might appreciate an overview of some of this year’s meetings. If you see one you like, come and join us, the cost is reasonable and you’ll see lots of smiling faces.

These are just some highlights, so don’t worry if you’re not seeing a meeting you attended last year!

The New Jersey Super-Regional Event will be November 9th, 2009 • Boston Crab Fest is held each year in June in Baltimore. The crabs are fantastic and the networking is world class. • The Indianapolis Motor Speedway “Indy” event will tentatively be held Friday, May 15th. Imagine touring the garage area and observing drivers practice on the track. It is a great day of racing, networking and FUN! Bring your camera and autograph book!

Do you enjoy the ballpark? Well we have options for you!

Enjoy the Chicago Cubs from a Wrigleyville rooftop box overlooking world famous Wrigley Field. The beer and brats are terrific. • Experience sunny skies and the Seattle Mariners from a private box. • The Angels on a perfect (aren’t they all?) Southern California evening. • How about a trip to see the New York Yankees in their new home? The dates will be announced soon.

How about some holiday socializing? Our group is famous for enjoying themselves!

Midwest has their famous Chicago Holiday Party. • Southern California has a wonderful event in downtown Orange. • Seattle has a fun winter evening including networking, cocktails and hors d’oeuvres. • New York, hey it’s the holidays in the City that never sleeps!

Quite a line-up isn’t it? And this is only a snap shot of this year’s regional meetings, there are also several luncheons and education meetings planned across the country. See the NEFA web site for a complete line-up. Our plan is to reach out to our members and bring value now more than ever and your Regional Committee needs your help. What can you do?

ATTEND. If there is a meeting nearby please join us! Meetings are usually organized around two primary objectives: Networking and Education. Registration will be available on-line at nefassociation.org or you can always pick up the phone and call.

OrgANIzE. We can always use your help arranging a meeting or helping with one. Reach out to the Regional Committee and get involved.

INcluDE. Why not bring another member or non-member with you? You don’t have to be a member to attend regional events so please share the fun.

These are challenging times in our industry but you are not alone, your fellow members are sharing ideas and best practices to survive and thrive and they want to share with you. Won’t you bring your thoughts and your laughter along with your challenges; together we’ll all be stronger.

Your Regional Committee

Chris Walker, CLP Chair

Tara Aasand Co-Chair

Kim King

Michelle Noyes

Nancy Pistorio, CLP

Alison Pryor

Doug Welch

Joe Woodley, CLP

Alan Zeppenfeld


In today’s tough financial market, the one lesson that all businesses must learn to survive, is to live within their means. If revenues are down,

expenses need to follow suit. For some, it will be a tough lesson to learn, and an even tougher policy to put into place. But smart companies will be proactive in tightening their belts to give themselves the best chance at riding out this economic storm.

A monthly budget is one of the best tools available for proactively managing company finances. But it isn’t enough to develop a budget that sits in the drawer

all year and gets pulled out at year end to see if the company has successfully met its financial goals. A good working budget is monitored monthly, and updated as necessary, to keep up with company performance and the changing market.

When preparing a budget, the first step is to project revenues. One must be realistic in this regard. It is easy to manage excess earnings, but setting “pie in the sky” revenue goals will doom a budget, and possibly the company, to failure.

Next, expenses need to be budgeted by month. The prior year’s expense activity

is a good starting point for this step in the process. However, as revenues may be stagnant or falling, it is not enough to operate based on last year’s actual expenses. Companies must perform a line-by-line audit of the prior year’s expenses to determine what costs can be managed better and what costs must be reduced or eliminated in order to maintain a strong financial position.

The goal of the budget should be break even or better. Managing expenses to make this happen may be a tough job, but a budget will help to plan ahead so that

managing thROUgh the eCOnOmiC stORm

In today’s tough financial market, the one lesson that all businesses must learn to survive, is to live within their means. If revenues are down, expenses need to follow suit. For some,

it will be a tough lesson to learn, and an even tougher policy to put into place.

By nancy geaRy

one knows what to expect in each new month and isn’t caught short of cash flow and scrambling to manage expenses after the fact.

A line-by-line audit of expenses will take into account every expense of the company. No stone goes unturned in this endeavor. Each expense, from salaries to office supplies, should be scrutinized. Taking a hard line on “wants” vs. “needs” is critical. It is a good idea to put together a small committee for this job, as their different opinions may be useful in really trimming the fat from the company’s

expenses. Getting different levels of staff involved in the process will also help gain perspective on the importance of various company expenditures and employee benefits, as well as company-wide support once the expense-cutting decisions are made.

Reducing cost is never easy, especially since one of the largest expenditures, and one that cannot go untouched when revenues fall, is payroll. In this regard, each company needs to evaluate what makes sense for their company. It may be necessary to lay off employees, in which

case companies need to make those tough decisions and not procrastinate. But depending on the budget cuts needed, there may be other alternatives to consider.

Companies can find creative ways to manage payroll, such as restricting or eliminating overtime for employees, reducing the number of paid sick days per year, requiring each employee to take off a day or a few days per month without pay, across the board pay freezes or decreases, reductions in benefits and perks, to name a few. For some companies, this may be adequate to manage costs, but for others, layoffs may be the only answer.

While large expenses, like payroll, are easy targets for budget cuts, no expense cut is too small. Does the company really need to provide gourmet coffee, weekly donuts, bottled water, cookies and snacks, magazine subscriptions and other such amenities? While they are nice perks to have when the company is flush with cash, it would seem that any employee would be willing to forgo the amenities in order to keep the company afloat, or keep their job secure. It is interesting to see how much these amenities can actually cost a company on an annual basis.

One key to successful cost cutting is to be open with employees as to the goals of the company in this regard. Hearing that certain cost cutting measures have been put in place to minimize employee layoffs will certainly help. Also crucial to keeping employee morale high is making sure that management shares in the cost cutting right along with the rank and file staff. No one wants to hear that benefits and jobs are being cut at the staff level, but the annual management retreat at the five star golf resort is still taking place. Instead, hold day long management meetings in the conference room, where staff can be reminded that all levels of employees are sharing in the cost cutting measures.

30 newsline | MARCH/APRIL 200930 newsline | MARCH/APRIL 2009

aBouT The auThoR

Nancy A. Geary is a CPA with over 25 years of accounting and tax experience, over 15 of those years serving the equipment leasing industry. She has been a partner at ECS Financial Services, Inc. since 1990. Ms. Geary heads up the Lease Servicing Division of her firm, which offers consulting, accounting, tax and portfolio management services to leasing companies.

Ms. Geary is active in various leasing associations, most recently as a Member of the Board of Directors of the National Equipment Finance Association (NEFA).

Continued on page 33


Rubric goes here

In economic times such as we find ourselves, it is easy to either over-reach or under-reach in our business plans. Both are costly mistakes. These are the times where strong managers don’t try to ‘run on empty’, nor spend foolishly to

reach goals that the times will not support. To find the balance between these two excesses is sometimes difficult, but your ‘instincts’ can sometimes be your best tool.

The old models are broken right now, but they will be replaced with the new. Since we aren’t sure how equipment leasing will fit into the future of the financial markets, or what products will replace securitization for funding partners. When we try to ‘guess’ the future is when we become the most confused, and the most prone to committing errors that can take down our business.

As we work our way around the current markets, remaining balanced with our commitments is even more critical. If we jump into the arms of a single funder, or a single vehicle for the sale of our leases/portfolios we risk losing our ability to focus on the subtle changes taking place in our markets. The new equipment leasing paradigm most likely leaves the old conduit and securitization models if not gone entirely, as least changed dramatically. It is also likely that the ultimate funders for our transactions will either be entirely different, or will have to make changes to their models to survive the changes that have occurred in the financial market, and those changes that are yet unknown but certainly coming down the road.

We need to run our business now in a way that allows us to continue to fight another day. That means controlling expenses

without losing the experiential base we have created in our business, finding efficiencies without wholesale changes that make us less capable to move quickly in whatever direction the markets take us.

More than ever we need to open our minds to new models for our business. Where many of us have simply sold off transactions to others and allowed them to service the paper, it may well require in the future that to sell the transactions to the newly created funding models, we may have to service the transactions ourselves. One thing you can do is to marry your front end application systems to software that can also provide a servicing platform, and not just servicing alone, but provide a portal so that the ultimate funder can seamlessly ‘view’ the portfolio performance securely online. There are products that allow you to prepare for the future, without the expense and hassle of paying for the added features until you really need them. Just one way to be prepared to jump either way the market takes you.

It is important to know that in times such as these that you are ‘rich’ if you just survive the next 12–18 months of economic turmoil. If your company succeeds then the small to medium size businesses also succeed. Our industry could be one of the real catalysts to keeping these businesses viable. I don’t think for a moment that it is a ‘stretch’ to say that the equipment finance industry is part of the recovery for our economy. We service the companies that are most likely to grow, and the vendor/suppliers who also employ large numbers themselves. In many ways we stand at the center of the financing options left for our lessees. Many of their other options simply don’t exist at the moment. So it is critical that we stay viable for our own benefit, but also for our lessee base.

The richest reward we can have right now is to survive for the good of our employees, and our customers. Although many of you may not see record profits this year, the true survivors will be those managers who can guide their companies through a rapidly changing market, and remain ready to embrace the change that is coming to our industry.

Here is to you all finding your riches, by remaining flexible and ready to change. That should position you to have ‘enough’ to thrive in this unique set of financial circumstances. n

the tao of mike By mike Rehling

“he Who knoWs he has enough is Rich.”~lao Tzu

aBouT The auThoR

Michael Rehling works in Vendor Sales for Ervin Leasing in Ann Arbor, Michigan. He welcomes you comments and insights via email: [email protected].


aDVeRtiseR inDeX

Allegiant Partners ........................................................ 33

Bank of the West ......................................................... 14

Boston Financial & Equity ....................................... 11

Collateral Specialists,Inc. ......................................... 18

Constellation Financing System ........................... 17

CT Lien ..........................................Inside Front Cover

Dolsen Leasing Company .........................................15

ECS Financial Services .............................................. 19

Financial Pacific Leasing ......................................... 11

International Decision Systems ..........Back Cover

Kropschot Financial Services ................................. 21

LEAF Financial .............................................................. 32

LEAN ................................................. Inside Back Cover

Lease Team ..................................................................... 23

Leasing Solutions .........................................................25

Leasing Technologies International ....................25

Padco Lease Corp ........................................................ 33

Premier Lease & Loan .............................................. 30

Quiktrak, Inc. ................................................................. 32

US Bank Manifest Funding ........................................9

World Leasing News .....................................................4


Continued from page 30

economic sToRm

NEFA FUNDINGSYMPOSIUM

Fall 2009


September 23 – 27, 2009Monterey Marriott, California

Visit nefassociation.org for more information

We Fund RelationshipsA small Ticket Funder for the Small Broker

• Broker and Vendor Programs

• Municipal Transactions

• Broker Documentation Accepted

• Flexible Finance Scheduling Available

There is a difference in Funding Sources!

800.347.5884

Member: UAEL, NAELB, AZELA

For more information please call or emailJim Padden, CLP or Bill Griffith, Credit Manager at:

email: [email protected]: [email protected]

www.padcofinancial.com

Financial Services, Inc.

Employee morale is important to a company’s success, especially in these trying times. Being honest with employees about the company’s financial situation will help keep morale high. Layoffs and other cost cutting measures will make employees worry about the company’s financial health and their own job security, when, in reality, these steps are aimed at keeping both the company, and the employees’ financial futures secure.

Budgeting and cost cutting are tough jobs, but they are crucial steps to managing a company’s financial health in today’s economy. And theses tasks will be much easier to accomplish proactively, where there is time for adequate evaluation and planning, than when a company is in a desperate financial position and decisions must be made under pressure.

Budgeting and cost cutting are not one time jobs. Budgets should be compared to actual financial performance on a monthly basis to maintain a company’s financial health. When performance does not meet budget goals, further cost cutting efforts may be necessary.

It is also crucial to have financial performance results available in a timely manner each month. It is not enough to react to budget overruns two or three months after the fact.

Managing through the current economy isn’t going to be fun or easy. But smart companies that are proactive, and use tools like budgets and cost cutting strategies, will give themselves the best chance to ride out this economic storm and build a strong foundation to manage their growth as the economy improves. n


I blame an ex-girlfriend and her father’s love affair with French Bordeaux. One glorious sip of Latour’s 1982 edition and I was hooked. I had no idea anything could taste so extraordinary, so heavenly. My life was changed forever that

night. I had just been to the promised land of red wine perfection and had no intention of ever going back. Wow, I thought, life is going to be one exciting wine experience and culinary adventure after another. Awesome! That lasted about five minutes before I heard the news that would potentially destroy my exciting new reality. “Where did you buy this and how much did it cost?” I asked. The look on his face was priceless. “Son”, he said, “just enjoy the wine; you don’t want to know the cost.” I’m thinking, “What? Do you know who I am? I am an equipment lessor; surely I can afford a bottle of wine.” He noticed I was not convinced so he added “All right, you might find this wine at certain specialty shops for approximately $2,400 a bottle.” “What?” I replied, trying to maintain a semblance of composure. “American dollars?” I joked, only half kidding.

That could have been the end of my dream had it not been for one more comment he made, almost in passing. He said, “And to think I paid $336 for a case back in 1985.” Now, I have never been much of a math guy (which makes me perfectly qualified to work in finance) but even I could figure out that his per bottle investment of $28 meant a staggering return of some 8,000%.

My passion for great food and wine has a tendency to dominate the other interests in my life. Who I date, what I read, when I

memBeR line

the evolution of a wine lover!

travel, and even where I live have been impacted by my love affair with all things culinary. But I do have one greater passion. And that is deal making. I love a great deal. Nothing is more satisfying than a brilliantly executed bargain hunt. The idea of buying low and drinking high was just too intoxicating. I knew the only way to imbibe like a billionaire on a lessor’s budget was to look for an angle. That angle was a wine cellar.

Aging wine can be quite rewarding and watching the evolution of a great wine over years can be magical. However, it must be noted that not all wines improve with age. In fact, the vast majority of wines made in the world today are intended to be enjoyed young. They are produced in a fashion that renders them soft and supple at first release, without much structure (acidity and tannins). Even under ideal storage conditions, wine intended for early drinking will fade and lose interest relatively quickly.

Whether as a hobby or an investment, wine collecting can be quite rewarding. Like with most things, keep it simple and remember to have fun. Getting started is not as complicated as you may think. Just begin with wines you like. Most experts suggest acquiring a 3 to 1 ratio of reds to whites. Reds tend to be more age-worthy while most whites are fruitier with more acidity so they reach their optimal age faster.

Balance is also important. Food and wine are a match made in heaven so you will want a cellar as diverse as your appetite. Even if you are primarily a red wine drinker, some food (i.e. lobster, artichokes) pair so well with white that you should consider making an exception. One trick is to buy your wine in cases. This way, you can monitor a wine’s progress through the years without drinking that last bottle too early. n

sTRaDa caPiTal coRPoRaTion & nefa BoaRD memBeR

Brad Kissler

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