Why start-up leasing companies that
do not invest in technology may suffer in the long
term.
It is not uncommon for smaller
leasing companies to have little focus on technology – they might
be using older systems, or simply relying on spreadsheets for their
transactions.
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Although this might make sense for a
start-up, technology experts advise filling the gap as early as
possible to prevent problems later on.
According to Tony Langford, head of sales at
NetSol Technologies, many small new leasing companies simply use
spreadsheets.
“Very often a leasing organisation starts out its life as a
truly sales-based organisation, and because salespeople’s focus
tends not to be on systems, but rather on deals, the system is not
seen as a priority,” he says.
Cassiopae’s UK director Ian Charik adds that
many small companies develop simple applications using the Visual
Basic programming applications, which seem cost-effective compared
with spending up to several thousand pounds for a system.
“It is very easy to try and design your own
system, and some of people are very creative in the way they do
these spreadsheets, with automatic updating and so on,” Charik
says.
However, spreadsheets have many limits that
make them unsuitable for businesses aimed at growing and avoiding
risks.
First, according to Charik, because they are
manually produced, Excel spreadsheets are insecure – it is easy to
change the contents of a spreadsheet without even realising it, and
once the change is saved, one is probably unlikely to find that
mistake.
Another issue regarding security is that
spreadsheets are typically created by one person, who is often the
only one that understands how they are designed. This, according to
Langford, creates an “unbalanced situation”, because the people
running the spreadsheet become crucial to the continuance of that
business.
“The security of the business is at risk if,
for some reason, that person becomes unavailable. With a proper
system, you’d have a software supplier to turn to, to find out how
it all works,” he says.
Langford adds that with spreadsheets it is
difficult to have audit trails, and therefore companies open
themselves to fraud.
“A proper system has all the checks and
balances in place. Spreadsheets typically have no audit trail and
all is left to the honesty and integrity of the people that are
using it,” he says.
Although some smaller lessors refrain from
using proper systems due to their perceived complexity and the lack
of trained staff, according to CFC Solutions MD Neville Briggs this
is only a “market perception”, because “newer systems are much
easier to use and far more productive”.
An advantage of relying on software houses is
that they provide training as part of the package.
Also, for companies without in-house IT
expertise – as typically happens for start-ups – software companies
sometimes offer a hosting solution, taking away the technical
burden and effectively acting as the lessor’s IT department. Lease
software providers also say that the cost is much less relevant
than one would expect.
Some software houses, like Cassiopae, offer
one single product for leasing companies of any size, where the
price is based on the client’s business size and complexity. If a
function is not required, the company simply switches it off – and
then switches it on when needed.
Birmingham-based CFC Solutions provides one
product for the vehicle leasing market which is designed to be
“fully scalable” for fleets from few hundreds to many thousands
vehicles. CFC uses a scheme known as software-as-a-service, which
makes it affordable for smaller lessors – for a monthly payment
based on the number of users, the company hosts the software and
its data online as well as providing support.
Other companies, like NetSol, have a specific
product for small lessors – usually a package that has standard
functionality and cannot be customised, but is also easy to
implement and at a lower cost.
When the leasing company then grows and
requires more functionality, it can upgrade to the software
designed for larger organisations, because both systems have the
same underlying structure and there is no need of data transfer,
which is the complicated part of changing systems.
