Equipment Leasing Scoundrels!
Today’s subject is one that this writer will attempt to present without naming names as many would prefer or without incriminating anyone in particular. That said however; if you are a company that fits into one of these categories, has engaged in this type of business practice in the past or you’re a sales guy for a company that handles their business affairs in this way the SHAME ON YOU! Fortunately this group represents a very small percentage of the otherwise hard working, honest and reputable equipment leasing companies taking care of their client needs everyday.
In any industry, regulated or unregulated; there are always individuals that seem to gravitate to the dark side of any business transaction and attempt to give nothing and expect payment in return or expect payment first and then give nothing or disappear, knowingly mislead or deceive a potential client in the sales process or flat out lie and cheat their way to temporary prosperity, usually on the back of those that can least afford it.
Here are a few of the warning signs that should act as red flags in any equipment leasing transaction:
To good to be true terms or interest rate –
We recently were presented with an opportunity to bid on a company’s technology refresh. It was expected to cost approximately $800,000 and fund over a 60-90 day window as the installation was taking place and some tenant improvement was initiated. We were happy to provide a real quote since this is our specialty and we are rarely beaten by anyone, especially another leasing company.
In this situation we were informed that another company was selected and that they were half the cost of our proposal. We attempted to provide some tasteful direction without speaking ill of anyone, since that is not our style but we knew something was wrong.
Not surprising to us to get a frantic call from this same client asking if we will still honor our original proposal and can we fund in the next 48-hours. Apparently everything went wrong with the “to good to be true” quote and the client was left holding the bag and facing penalties for non-payment on equipment already ordered. We were able to execute our docs quickly at yes the original quote, even though a premium should have been applied due to the rushed paperwork that required our staff to work overtime to get them handled. We were also able to coordinate payment with vendors to avoid any penalties, equipment delivered and installed and the client’s business operations remained uninterrupted.
Deposit can’t or won’t be returned –
In any leasing transaction it’s not uncommon to have a deposit or first and last months lease payment change hands while final approvals and funding are underway. Unfortunately there are companies in our industry that use that deposit as their meal ticket instead of actually planning on funding anything. A client is not approved for financing and then the leasing company refuses to return their deposit or retains 50% of it as a processing fee.
This type of problem usually arises from a client needing financing badly, going to one of the “You’re approved for $250,000 immediately” vendors and then getting swept up in the process because their need is pressing. Real leasing companies return the deposit without issue unless there was some sort of fraud involved from the client’s side. Yes that actually happens that some uneducated or ill-advised companies try to take advantage of the leasing company by submitting fraudulent information.
Bait and Switch –
And you thought it only happened in retail? Even in our industry there are many proposals that go out as expected with the correct terms and all looks well. Then all of a sudden as funds are expected to be sent for an agreed equipment purchase, the leasing company will call and say there was some sort of irregularity in the company which will require an amendment to the master lease and scheduled terms and funds are frozen, leaving the client company in a real mess.
Yes there are times where flexibility is needed since any business process is never perfect and we just deal with it. The companies that routinely use this approach and knowing that everyone gets squeezed for more in the 12th hour, these are the ones that fall into our SCOUNDREL group.
Equipment Orders Get Messed Up-
Once a leasing contract has been signed and all funds approved. The process of funding is a complex and challenging one. Our projects are often times complex with multiple vendors, scheduled upgrades, deposits and progress payments to contractors and equipment suppliers and then the usual paperwork involving insurance, verified delivery and installation, inspection of equipment to ensure all is in order and then a hundred other detail issues that are required.
We happen to have one of the BEST and I mean BEST doc management teams in the industry. Unfortunately many other leasing companies are plagued with problems after the lease is signed because they can’t move money as expected, orders are misplaced, incorrect or lost and basically a lack of attention to detail or a doc department that is short staffed to handle the most important part of the equipment leasing transaction.
There are many other areas that our infamous group of SCOUNDRELS excels, but I will leave those for the next series. As an equipment leasing company that is large, well-funded, has a spotless reputation and has served some of this country’s largest corporations we routinely fix problems in the market as they arise. It would sure be easier if equipment leasing customers would do just a little more research on their chosen provider and not just assume that all is well with a low-ball quote.
In the mean-time we will continue to work at solving the equipment leasing needs of our clients and anyone else that really needs a change from their current situation.