As we have seen in recent weeks, few businesses are immune to the challenges created by the global pandemic. COVID-19’s impact on the economy will present tough economic and operational challenges for nearly every enterprise, including lessors and their customers.
In the coming weeks, lessors will likely be creating strategies and planning a path forward. Some will take a conservative approach to new business, reducing new deals and cutting back where they can. Others will identify opportunity amidst the chaos. Instead of pulling back, they will step forward and look for the new opportunities that are created by every crisis.
For those choosing a growth strategy, the path forward requires a new mix of market insights, predictive thinking and scalable technology. The selection of agile technology is especially important, as we learned in the first weeks of the pandemic. Companies of all sizes accelerated their digital transformations, threw conventional processes out the window and followed a path of agile experimentation and improvisation. This allowed organizations to spin up remote workforces in a fraction of the time it would take in the absence of a crisis. Speed, agility, scalability and flexibility saved the day. So, we know now, more than ever, just how important the nimbleness of cloud technology is and how central it will be to our growth.
Of course, technology is just a platform. Growth in in the post-pandemic world also requires new strategies. As you develop your plans, here are some things to consider:
(1) Explore Sale-Leaseback Relationships — For many lessees, financial hardships created by COVID-19 are leaving them short on the cash they need to operate their business. Sale-leasebacks offer a creative solution to help them free up cash, while also benefitting lessors. Under this arrangement, the original lessee sells back an asset to the lessor—raising capital—and then leases the equipment back from the lessor, creating a win-win for both parties. Additionally, sale-leasebacks may also create new opportunities for lessors to unlock valuable tax benefits.
(2) Identify Asset Types Positioned for Growth — As the crisis subsides, there will be certain asset types that will come out ahead—and others that will not fare quite so well. As a lessor, are you looking at which assets are poised for growth? Additionally, are you changing your sales offerings to help foster new growth that aligns with these market changes?
(3) Monitor Merger and Acquisition Opportunities — Inorganic growth may be another potential option in the coming months to grow quickly at a reduced price. While global mergers and acquisitions have plummeted as a result of the crisis, it appears it may only be a temporary slowdown. Most analysts expect an increase in M&A activity as soon as the economy begins to show signs of life again.
(4) Limit Risk Through Securitizations — For lessors looking to preserve cash or reduce their portfolio risk during the economic crisis, securitizations may offer one way to retain vital customer relationships—with fewer risks involved. By moving debt off their balance sheet, lessors can increase liquidity and prepare for the unexpected, while continuing to manage valuable customer accounts.
(5) Adopt Innovative Cloud Solutions — Ten weeks ago, no one would have predicted we would be where we are today. Since this pandemic began, business agility and flexibility have become critical capabilities as we all navigate unanticipated issues and remote work challenges. One of the advantages of cloud, or SaaS, solutions is that the vendor can take care of managing day-to-day performance—ensuring you have the right updates and services to keep up with evolving challenges. Consider deploying cloud-based portfolio management technologies to empower your operation with the agility it needs to continue to win deals during an uncertain time.
Kristie Kosobuski, CLFP Sr. Director Product Management and Product Marketing