Everything You Need To Know About Equipment Financing Automation

The equipment financing space is vast. Nearly four-fifths of U.S. businesses lease or finance the equipment they need to function and thrive.

As a result, “the equipment leasing and financing business is forced to wage war on two fronts,” according to Elena Ionenko, co-founder and COO of TurnKey Lender. “On one side, some significant verticals remain stagnant, while others are subject to fierce competition among financiers in a fintech arms race to win the hearts and minds of businesses in need of capital equipment.”

That competition spans virtually every major equipment category:

• Vessels and containers 
• Trucks and transportation equipment 
• Rail cars and rolling stock 
• Mining machinery 
• Medical technology and equipment
• Materials handling
• Manufacturing and industrial machinery
• IT equipment and software
• Construction and off-road equipment
• Business, retail, and office equipment
• Aircraft and unmanned aerial vehicles 
• Agricultural equipment 

 “Each of these industries has special requirements for financing, and our modular and configurable SaaS financing platform is meeting these diverse needs,” says Ionenko. “Our offering is easy to use, compatible with different system softwares, and our technology is continuously updated so our clients never have to play catch-up with their competitors on the tech front.”

What equipment providers gain with TurnKey Lender

Equipment providers that use TurnKey Lender for their equipment financing can: 

1. Instantly make decisions on credit applications 
2. Provide flexible lease and loan financing options to suit all customers, with pricing commensurate with the risk associated with particular borrowers 
3. Increase average order size 
4. Flatten income seasonality with installments coming in throughout the year 
5. Update, streamline and automate legacy processes for digital transformation 
6. Reduce, even eliminate, human error and other operational inefficiencies 
7. Easily integrate lending software with any system software in order to centralize lending operations 
8. Earn new lending fees while retaining access to and control over customer and business data 

End-to-end financing technology from TurnKey Lender

The solution to this conundrum lies in improving your financing infrastructure to give you a firmer handle on risk, decisioning, and front-to-back automation. Here’s how it works.

TurnKey Lender’s Equipment Financing Platform is an AI-based solution that provides full automation and instant credit decisioning to increase revenue and deepen client relationships. The technology is tailored to your precise business processes and provides fast, state-of-the-art financing. 

TurnKey Lender’s cloud-based equipment-financing and asset-leasing platform incorporates the manufacturer’s order-processing automation, business logic, loan management, reporting, and customer portal in an integrated solution, providing manufacturers, distributors, and resellers with bank-grade credit decisioning.

In-house financing or outsourcing financing to lenders

Improving your financing infrastructure raises an immediate strategic question: should you handle financing in-house, or hand it off to a bank or third-party lender?

Having an embedded lending or lease-payment facility also speaks to a real need among capital-equipment consumers. A company that seeks to buy the machines it needs to operate is assuming risks associated with “residual value,” or the value of an item after a set period such as the term of a lease. To realize this value and control expenses, a company that buys its gear outright has to sell it eventually, and at an optimal price. 

That’s maybe simple enough as a one-off transaction. But a company with a fleet of 18-wheelers would need an entire business unit dedicated to extracting residual value from its trucks on a continuous basis.  

“As a result, companies frequently opt to lease assets to transfer residual-value risk to you, the lessor, even when they can well afford to buy the equipment,” says Dmytro Voronenko, CEO and co-founder of TurnKey Lender. “In this view, leasing is a way for your customers to protect their return on investment.” 

Companies that use embedded lending or lease-installment services can expand existing customer relationships through on-going return business, cross-selling, and revenue from financing fees. 

These sales opportunities can be further enhanced through data analysis by means of machine learning and artificial intelligence (standard with TurnKey Lender’s lending-software suite) as a way to achieve a better understanding of your client base, including its behavior and preferences. 

In this light, having embedded lending or lease-payment capabilities means companies like yours can provide lucrative new services at a customer acquisition cost of almost nothing.  

Why equipment suppliers choose to finance purchases in-house

Among arguments in favor of equipment suppliers using in-house equipment-financing technology like TurnKey Lender’s to issue financing on their own are: 

• Affordability from the financing platform’s modular structure allows manufacturers to start small and add functionality as needed. It’s anything but one-size-fits-all. 
• Flexible underwriting lets you make credit decisions, and control risks, on your own terms. You can also waive down payments – with such decisions backed by verifiable data. 
• Better portfolio yield from artificial intelligence that lets manufacturers optimize portfolio yield by approving only the customers you want, at optimal risk-adjusted rates. 
• Enhanced customer loyalty from white-label technology so you don’t have to worry about clients getting confused by third-party documentation. 
• Client-data integrity and security ensures customer data isn’t shared with third parties. 
• Business metrics that can help you understand customer behavior and preferences, and design incentive programs accordingly. 
• Staff training and 24/7 IT support and customer service Do you have a question? It gets answered in real-time. 
• Mobile-lending capabilities by means of encrypted apps designed for secure, on-the-spot service. 
• Scalability that lets a financing program grow as the business grows. 
• You keep 100% of the fees No fuss, no muss, and absolutely no split with a bank. 

Companies typically decide whether to finance or lease based on the following criteria. 

• Obsolescence – capital equipment that quickly wears out or becomes obsolete may be a candidate for leasing – provided the gear isn’t worn out before the lease term expires or there’s contractual provision to keep the lessee from having to keep paying for broken equipment. Lessees also avoid having to worry about disposing of outdated equipment. 
• Timeline and budget  – in the traditional view, if the equipment is needed for more than three years, secure the financing to buy it (if you can’t buy it outright). Although leasing usually offers a change to get up owning the equipment, financing tends to be cheaper. But if the company is planning to buy the equipment once the term of the lease has ended, the company is likely to end up paying more than it would through financing. Leases tend to carry smaller monthly payments than a loan. If you’re operating on a thin profit margin, a lease is worth considering. Be aware that if you are planning on purchasing the equipment at the end of the term, you’ll likely have to pay all or some of the cost of the equipment. This arrangement will probably be more expensive in the long run. 
• Cash-on-hand – if a company can’t part with 10% to 20% of the equipment’s value up front, it might have difficulty finding a lender willing to dance. In this case, a lease might be the only alternative.

Instead of leaving your customers to arrange financing on their own, or serving as a conduit to traditional sources of finance, you can deploy a white-label platform with best-of-breed technology – including innovative artificial intelligence and deep-neural learning – that provides instant credit decisioning and automates manual lending processes to streamline every step of customer experience. 

Essential features of next-gen equipment-financing technology

TurnKey Lender Equipment Financing Platform addresses the whole financing lifecycle, including: 

• Application processing 
• Risk assessment 
• Approvals 
• Loan origination 
• Underwriting 
• Servicing 
• Collection 
• Reporting 
• Archiving 
• Compliance 

TurnKey Lender’s automated underwriting means you don’t have to be an experienced lender to provide financing, saving you time and money on training and recruitment. The platform also features:

• Nearly instant credit decisioning (think seconds, not days) for financing applicants
• Advanced guarantor credit scoring that applies your rules
• Automatic background and fraud checks
• Integration with your website so clients can apply for financing from anywhere at any time with any connected device
• Pre-qualification for amounts you set before they begin shopping
• Application forms that can feature descriptions and images of the equipment on offer
• An intuitive web and mobile interface that makes the lending experience easy and effortless for customers

TurnKey Lender’s Equipment Financing Platform provides for bank-statement analysis for dynamic, permission-based credit scoring based in part on the applicant’s income and expenses. The platform’s ability to analyze these inputs on the fly means your business can:

• Gather and analyze insights from income and revenue analysis
• Conduct financial-statement analysis as required
• Stay compliant with anti-money laundering and know-your-customer criteria
• Deploy AI that provides insights on customer preferences and behaviors for more targeted marketing and special offers
• Create custom credit products with just a few clicks

TurnKey Lender’s automated booking and order completion assures fast, full-cycle functionality, including:

• Automatic loan-document generation
• Dedicated borrower portal
• Integrated e-signature services
• Funds disbursement with automatic fee calculation

TurnKey Lender provides ongoing servicing and management of individual financing arrangements that features:

• Repayment installments that can be put either on autopilot or paid from a dedicated borrower dashboard
• Monthly statements to borrowers
• Configurable due-date and past-date notifications, and modifications for special circumstances via text or email
• Automated post-financing communications so customers receive regular payment reminders and account notices

Case Study: Equipment Finance: End-to-End Automation of & Digital Lending In-house

The time to digitalize your financing operations 

Equipment lessors targeting such businesses need a financing solution that digitizes all loan-approval processes, meets any and all of their industry-specific needs, and gets them up and running fast. For example, companies that experience seasonality to any degree – things like ski resorts, temperate-zone marinas – will appreciate your ability to offer incentives such as zero down, and in-season-only payments that can lighten their loads considerably, and help you stand out from your competitors. 

With TurnKey Lender, your company can implement equipment-based loan origination in ways best suited to your industry and your company, including rent-to-own, lease-to-own, and value-add incentive programs. Integration of the lending platform with your website and your e-catalog converts your “shopping cart” into a financing platform.

This flexibility lets your company consider financing for applicants that might fly under other financiers’ radar. Using inputs like the would-be borrower’s income structure, expenses, and other financial behaviors, as well as traditional considerations such as longevity and credit scores, your company can uncover hidden gems, secure in the knowledge they’ve been analyzed by the industry-leading AI.

In addition, TurnKey Lender comes with integrations and proprietary modules that allow your company to complete processing, underwriting, origination, and disbursement processes in a matter of minutes.  

The platform also powers ongoing customer engagement through AI-driven communications, allowing equipment suppliers to introduce new programs and special offers across a variety of lending models:

• Factoring 
• Vendor financing  
• Rent to own 
• Lease to own  
• Supplier financing 
• Inventory financing 

In addition, the best open-architecture equipment-financing software supports custom credit products tailored to the needs of capital-gear makers while enhancing their customers lifetime value in the process. 

The results speak for themselves. On average, equipment manufacturers that use TurnKey Lender see:

• 58% increase to the average order value
• 44% increase in sales conversion
• 20% increase in purchase frequency within 30 days

Plus, equipment manufacturers keep the transaction fees (and any additional interest, fees, and penalties) that third-party providers usually claim for themselves.  

Provide financing decisions in seconds, grow customer value 

Interested in seeing how the cloud-based platform incorporates the manufacturer’s order processing automation, flexible business logic, loan management, reporting, and customer portal in a single, integrated solution making the entire financing process 100% automated, quick, and easy to use?  Schedule a call today.