Strong relationships built on
trust and a good understanding of risk will help to reap the
rewards of the SME market. That was the message from Jochen
Jehmlich from Société Générale Equipment Finance.
Go deeper with GlobalData
Jochen
Jehmlich, managing director of Société Générale Equipment Finance
(SGEF) Germany, presented a snapshot of the SME market in his home
country and how his business utilises the opportunity small
companies present.
Jehmlich said leasing in Germany
was still getting bigger and added SMEs are attracted to it. Tax
benefits, which used to be the main driver for businesses to use
leasing, are no longer relevant and companies are choosing to lease
for different reasons.
SGEF in Germany is a traditional
leasing business, said Jehmlich, based on transportation,
industrial equipment and increasingly more and more hi-tech and IT
equipment.
He said 95% of SGEF Germany’s
customers are SMEs, gained predominantly through vendor channels
with a further third of business generated through direct business
and a branch network.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataHe identified the most important
aspect of a good SME leasing business in Germany as a strong client
relationship and said when SGEF get a new customer they always try
to generate follow-up business and finance other assets for the
customer.
“These relationships are built on
trust,” he said. “Often we don’t have long contracts but a hand
shake is more than a contract.”
He said small business owners will
judge a lessor on promises kept and added, while price may not be
paramount, a local presence will be. Delivering on what a SME
expects can generate long-term business, he added.
“A typical finance officer in a
German family-owned business may be in his position for 20 years,
so if he handles the relationship well business will get easier and
easier.
“If you mishandle it the business
will be over for the next 20 years – believe me, they have very
long memories.”
The second
vital aspect of strong SME business is the understanding of risk,
Jehmlich said. A risk structure which is in line with market value
development seems simple but a lot can go wrong in the details, he
told the Munich conference, and identified important questions a
lessor must ask.
“It starts with the price,” he
said. “What is the given list price? What is the discount? How is
the configuration of the asset? How can you off-set the initial
drop in the value? Do you have asset experience? Can you sell the
asset yourself or do you need partners? What is the likely residual
value?”
Assessing risk often requires a
strong relationship first in order to see the balance sheet and
understand a client’s business.
“If you do it right,” Jehmlich concluded, “lending to SMEs is a
stable and profitable business which adds value to shareholders and
customers.”
See also:
Conference opens with big
questions
Using leasing to ‘look
better’
