To thrive in the current and evolving business climate, asset finance lessors need to explore how to enhance existing partner relationships or develop new ones says Mukul Mittal, vice-president of industry solutions at US-based Q2

One of the very closely tracked issues in these times is how and when the recovery will take place. What will the recovery curve look like, will it be U, V or W-shaped? Most people and businesses have started looking ahead, planning for the next few quarters and next year. The question we should be asking is: what will it look for asset finance businesses?

New business for asset finance is based on an increase in business investment. This becomes a trickle to nothing in times of uncertainty. As businesses are restarting, they are re-evaluating their investment plans over the next few quarters.

Some are taking the wait and see approach, others are approaching this time as an opportunity to define themselves as market leaders. We have seen new leaders appear after every crash.

Amazon became the largest online retailer from an online bookstore after the dot com bubble in 2000. Netflix gained 3 million members after introducing streaming plans in 2009 during the financial crisis.

Navigating through a crisis well could be a springboard for the next 10 years of an organisation’s growth. Asset finance lessors should explore how to enhance existing partner relationships or developing new ones.


Your partner network may consist of brokers, dealers, independent sales organisations (ISO), vendors or manufacturers, etc. Both of you have a common goal of attracting customer investment. In times of uncertainty, most organisations are planning for conserving cash as no one can predict how long the crisis will last.

Asset finance organisations enable vendors, dealers, ISOs to promote their products and services while conserving cash.

In the UK, lessors typically source new deals through their network of established brokers and ISOs /vendors.

Brokers may generate both all types of deals and values, whereas ISO’s provide deals that are typically small to mid-ticket for the products sold by them.

Typically, partnership agreements are simple. Structured to provide the asset finance organisation with a minimum yield and the partner gets a base commission for each deal funded they may have limited ability to address the market needs of today.

The need of today is to get more creative. Some of the tools available for asset finance organisations to offer their partners are:

  • Residual Guarantees – partner guarantees a higher residual at the end of the lease to reduce rent payable by the lessee.
  • Subsidy / Subvention – partner pays subsidy or subvention to the asset finance organization reducing the financed amount to reduce rent payable by the lessee.
  • Credit Guarantees – partner guarantees credit for customers who do not meet the asset finance organisation’s criteria.
  • Private Label – partner provides financing in their name to reduce the friction of dealing with multiple parties for the customer.
  • Pay Per Use or Bundling – a partner can bundle pay per use with financing in a single contract for aligning cash flows based on customer’s usage.


The challenge of enabling advanced options to partners is the ability to manage them in a cost-effective and streamlined manner. The inability to operationalize agreed terms and conditions impact the asset finance organization’s ability to enforce guarantees or collect dues from the partner.

Setting up the right mid-office and back-office systems is a must to avoid any operational challenges.

Mukul Mittal is a US-based leasing professional with 20-plus years of experience in software product management.