Now, while we may not be expected to
pay back the full value of a lease transaction if it goes wrong,
there is an expectation we mitigate risk by undertaking a certain
amount of DD.
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So, how do brokers deal with this? Vineesh
Madaan, MD of Bluestone Leasing, said his company has a policy of
obtaining accounts, CCL, Data Protection Licence, a site visit and
a signed ‘Vendor Trading Agreement’.
Tony Hewett, of Lease UK, meanwhile, said his
company always does a site visit.
“A balance sheet alone will not stop a
problem; it is the integrity of the directors that is key,” he
added.
Lease UK also tends not to be involved in the
invoice chain.
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By GlobalData“The benefit of the invoice chain does not
outweigh the downside risk associated with reps and warranties,”
Hewett went on to say.
Another broker noted it also asks for a CCL,
VAT details, accounts and a site visit.
“We are always concerned if we get a call out
of the blue. We will want to know what leasing companies they have
dealt with and where they used to work,” he noted.
The general consensus is lessors expect
brokers to carry out DD on the supplier. They can only analyse a
supplier by accounts, hearsay and bad debt. If brokers are to get
through the next few years, it is imperative we improve DD on the
suppliers we work with and the customers they introduce.
Jeremy Hall
The author is founder of Wyse Leasing and CEO
of WestWon Capital.
