November 15, 2002

 

  Headlines---

 

Pictures from the Past---1994-Three Ladies

           Classified---Help Wanted---Chase Industries

            Streamlined Sales Tax Agreement Features "Equipment Leasing"

             American Express Business Finance-----Exposed

              Bankers Leasing -The Skinny on Citibank

               ELA Dues Innovation--" $600 Transition Member"

      HP Unveils  90-day Holiday Lease Payment Deferral Program

       Fair, Isaac Declares Quarterly Dividend

         30-year mortgage rates drop to new low        

           Wholesale Prices Have Largest Gain in 2 Years

              If Higher Rates Loom, Will the Fed Twist?---Floyd Norris

                   More Borrowers Defaulting on Cards--ABSNet.net

           News Brief----

             Will the West Coast Finally Get the Trophy?

           ( USC's Palmer has numbers and momentum,

           but is anyone west of Vegas paying attention?)

 

    ### Denotes Press Release

 

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       Pictures from the Past---1994—Three Ladies

 

 

 

(left to right) Jan Holland Sanders, AVP, Commerce Security Bank,

Sacramento, CA; Felicia Torres and Gloria Wagner, cost service manager, both of EPI Leasing Company, Fresno, CA.

 

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            Classified---Help Wanted—Chase Industries

 

Sales: National: 7 offices Medical & IT/ plus.
Seeking professionals w/solid book of business
& high ethics. Exceptional support & commissions.
Expenses paid. 616-59-6800
Email: gsaulter@chaseindustries.com   "UAEL"

 

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Streamlined Sales Tax Agreement Features “Equipment Leasing”

 

The Equipment Leasing Association (ELA) welcomes the adoption of the Streamlined Sales and Use Tax Agreement by the Streamlined Sales Tax Implementing States.  The Agreement now being sent to state legislatures for enactment contains an ELA supported definition of leasing and lease-sourcing provisions. ELA State Government Relations Committee Chair Valerie

Guerrieri, CIT, hailed "this unified industry effort that will deliver simplification when administering sales tax on leasing transactions."

 

The process began in March 2000 when the Equipment Leasing Association joined deliberations by state revenue officials implementing the Streamlined Sales Tax Project, a new nationwide software-based uniform sales tax system.  It is planned for all types of consumer and commercial transactions to simplify and make uniform the sales and use tax system in 45 states and the District of Columbia. Although the Project is often seen as an effort to tax Internet sales, ELA engaged in the process to safeguard and simplify sales tax administration on commercial leasing transactions.

 

Negotiations between lessors and state governments stretched over two years during which ELA served as a coordinator of a broad effort industry effort that included the American Automotive Leasing Association and National Vehicle Leasing Association.

 

The collaborative effort culminated with provisions complementary to existing commercial practice.  Benefits to be derived from enactment of the sales and use tax Agreement by states includes the first nationwide uniform definition of leasing

supplemented by a sourcing rule that is consistent with rules common to income tax apportionment and personal property tax situations

 

In addition to consistent definitions, states will adopt uniform bad debt provisions, common rates and tax bases by state while relaxing administrative burdens for registering, exemption certificates and electronic filings.  States will also limit the scope of audit for companies participating in one of three software-based models.

 

Guerrieri complemented "the willingness of state revenue officials to spend several years listening to the concerns of equipment lessors.  The eventual uniformity amongst the states is an outcome that will benefit our industry."  She also noted it will be a continuous mission of ELA to monitor Project activities and provide input to proposals that affect our industry.  ELA continues to raise the issue of tax imposition and credits as the Project moves forward.  Other topics on an advisory distributed by the Project include audit standards and procedures; uniform exemption certificate; rates/jurisdiction database; central registration system; matrix guidelines; digital property definitions; drop shipments;

and bundling.

 

 

Organized in 1961, the Equipment Leasing Association (ELA) is a non-profit association representing companies involved in the dynamic equipment leasing and finance industry. ELA's mission is to promote the leasing industry as a major source of funds for capital investment in the United States and abroad. ELA maintains an informational portal for financial decision-makers at http://www.leaseassistant.org. Headquartered in Arlington, Va., ELA has more than 800 member companies and a staff of 27 professionals. Equipment leasing is estimated to be a $244 billion industry in 2002. Visit ELA online at http://www.elaonline.com.

 

 

 

American Express Business Finance-----Exposed

 

In 2001, the Diversified Sales Team at American Express Business

Finance, under my direction (not including specialty vehicle in

Chicago), funded in excess of $210,000,000 in leases with an average

yield above 16%. (you can do the math on the spreads)

 

This highly profitable business was originated by 70 hard working sales people and three very dedicated sales managers; Dan Dengate, Tom Strain and Scott

Kaase.  (Guys...as I told you this time last year...beware, as your blood is not "AMEX BLUE") 

 

If you have been terminated by American Express Business Finance, and

love the leasing business, we'd like to hear from you. 

 

Richard A. Baccaro

American Equipment Finance LLC. 

rbaccaro@aefllc.com

Fax:  908-542-9333

 

-----

The specialty vehicle group is a separate group. The problem is to not a problem that involves managing talent and ego. Amex is high on talent to be sure, but low on management smarts.

 

The tactics internally of constantly flip -flopping accounts, people, focus and objective leaves them with no continuity for vendors or customers. Everyday brings a new focus or change.

 

Huge Vendor Program initiatives are launched in which the National Accts persons wishes who signed up the account are not followed and then the sales force gets the "opportunity "to hit the marketplace with Sky High Rates, poor calculator tools, shoddy contact information , and low buy in and assistance in marketing the programs both internally and on the vendor side. Its almost a "lets throw it and see if it sticks philosophy."

 

 God forbid someone in sales management go on a call with a sales rep or try to help out on a deal or strategize with a sales rep. Good luck if you need some help on a deal that would bring in lots of revenue.

 

In response to Raeder about the low 3's, your forgetting Amex builds in 400 basis points to cover past bad debt from First Sierra before they start adding anything else on..........some big name programs have rates at 20%.

 

 "Gee, I wonder why we're doing such a small %(10-20%) of the deals our sales people see on the street?"

 

Name Withheld

 

Bankers Leasing –The Skinny on Citibank

 

Yesterday, I was contacted by an account representative for Bankers Leasing.

For the past few months the sales team had suspected something was wrong, as

expense account reimbursements were strangely delayed, and marketing and

convention travel was being highly scrutinized.

 

It has been known that Bankers has been up for bid for several months, yet

despite purchase offers, Citibank Leasing has decided to close the division

rather than sell. Many at Bankers feel this was due to Citibank not wanting

to compete with any potential buyer of Bankers.

 

Citibank Leasing also owns Citicapital Vendor Finance, a direct competitor of Bankers Leasing in the medical equipment leasing industry. Prior to the purchase of Bankers Leasing, Citicapital Vendor Finance had been competing with Bankers in major accounts such as PSS (Physicians Sales & Service). Many of these major

accounts had agreements with both Bankers Leasing and Citicapital Vendor

Finance for their customer financing, so after the purchase, Citibank found

they were competing with themselves.

 

 They found some reduced rates were offered and application only business was split by vendors and sent to each division. Bankers and Citicapital maintained separate credit desks consequently, the split applications went unnoticed.

 

As of yesterday morning, despite the offers made to purchase Bankers

Leasing, most  sales representatives were terminated and required to vacate

the premises. I am told, it was handled in a very cold manner via a

conference call and despite several questions Citibank Leasing merely closed

the conversation with "Bankers is now closed and will be liquidated".

 

Employees in California and offices in Chicago were given 60 day notice as

required by state law with other employees terminated immediately.

 

Vendors were contacted with the news that Bankers had been closed and that all

business would be handled by Citicapital Vendor Finance.

 

Representatives of Bankers received immediate phone calls from competitors

interested in hiring the whole group. Negotiations continue as the sales

team desire to find a home for themselves and their book of business.

 

Prospect Leasing was originally founded by Bruce Horton, now with Banco

Popular Leasing, with a specialty in medical equipment financing. The

company was later sold and renamed "Bankers Leasing". Citicapital later

purchased Bankers along with American European Bank "EAB", a general

equipment Lessor (also closed by Citicapital) two years ago.

 

Name With Held

 

Citi keeps saying "business as usual" and they'll take any leasing deal but

try calling them.  They have no programs for middle market leasing.  They

just want us to think they're still a competitor in order to keep other

lessors out of the market. They are in the business of buying lease

portfolios so they can augment the business throughout the myriad of other

services they provide.  Many of my (former) clients are disappointed to hear

that Citi doesn't want their business. 

 

Name With Held

 

 

 

Equipment Leasing Association Dues Innovation—“ $600 Transition Member”

 

President Michael Fleming:

 

“Since the last dues adjustment in 1992, the profile of the industry has changed considerably, primarily through industry consolidation. The dues schedule should be amended to accomplish the goal of all members paying at a dues level that at a minimum covers costs.

 

Please remember that ELA is positioned to be the association for every company that makes a difference in the industry. There are basically two types of companies that make a difference every day. The largest group is made up of organizations, large and small, that actively participate in ELA.

 

1. They support advocacy efforts with their participation and / or financial resources.

2. They respond to surveys and questionnaires. 

3. They serve on volunteer bodies. 

4. They are presenters - and they do many other things that keep the association going.

 

 

 

          from their ELT Thursday Newsletter

 

“These recommendations also include adjusting the association's dues schedule, which had remained unchanged for a decade, and no longer reflected the realities of the leasing industry, and of the economic situation those realities dictate. The task force recommended that the financial resources to support this value-based position should be based on fair share. That is, all member organizations pay their proportionate fair share of the cost of ELA programs, whether supported by dues or by elective registration/user fees.

 

“The fact is that industry consolidation has left far fewer of the large ELA members that contribute the bulk of the dues, while the basic cost of maintaining the smallest ELA membership is now calculated to be about $2,200, much more than the present minimum annual dues. Without a dues schedule adjustment, this situation is untenable for ELA over the long term.

 

Basically there are no more $1200 “under $10 million” dollars a year in

sales. The “minimum is now $2200 per year (plus an application fee

for new members. Last year, it was $400)..

 

 Over $500 million there is some adjustment and the top maximum under the formula is $33,000 in dues.

 

There is a new “Transitioning Individual Member Flat fee of $600, maximum of 12 months.”

 

“New category of membership -Transitioning Individual.  A person is eligible to be an Individual Member if:

* she/he was, but is not presently, an employee of a regular ELA member company. 

* the application has to be made within two months after concluding active employment in a regular member company. 

* the membership is for a maximum of twelve months, costs $600 and carry no voting rights.”

 

 

“ELA is preparing for what we all hope will be a very good year, a turn-around year for the industry.  In 2003, ELA will sharpen its focus to programs you have said are the most important to a successful company and successful industry.  A year ago, an ELA Positioning Task Force was asked by the board to study the industry, the association and come to conclusions about what the positioning of ELA should be, the common purposes that unite us and what we must work for. Your ELA Board has adopted its recommendations to make ELA a more valuable association to its members. 

 

“What your Board has done in effect is clarify and define who ELA is, how members can most effectively get value from this position and how members can achieve the common purposes that are articulated in the newly developed positioning of ELA. 

 

“Members are clearly saying they value four things from ELA:

* Advocacy - A spokesperson to represent the industry with government and standards bodies on matters critical to product development and the conduct of business.

* Industry Knowledge - Gather, store, analyze, provide and share knowledge related to industry performance, best practices, financial accounting and legal compliance and market strategies.

* Business Development - Develop and sustain business relationships and new business opportunities.

* Access to Capital - An informed and  supportive investment community and access to various funding alternatives.”

 

 

Michael Henderson

Director, Membership & Marketing

Equipment Leasing Association

4301 N. Fairfax Drive, Ste. 550

Arlington, VA 22203

mhenderson@elamail.com.

 

(Leasing News will present information from the panel on the direction of

the major leasing industry association, its direction, and view for 2003.Editor)

 

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