AEL Financial, LLC. Presentation for: Equipment Leasing Association

Transcription

1 AEL Financial, LLC Presentation for: Equipment Leasing Association

2 AEL Financial, LLC AEL Financial is part of the Illinois-based Forsythe Group of companies. The Forsythe Group includes a diverse portfolio of companies in numerous industries, including: banking, financial services, energy services, industrial power equipment, sports and entertainment, agriculture, and real estate development. Affiliated companies include: American Enterprise Bank Indeck Energy Services, Inc. Indeck Power Equipment Company Forsythe Racing, Inc.

3 Our Mission To establish long term strategic alliances with leading manufacturers, distributors, and resellers of high-technology equipment, software, medical and other equipment, while providing unsurpassed marketing & service support available in the industry. What we bring to the table: Industry Experience Systems and Technologies Core Competencies Flexible Program and Transactional Solutions

4 Systems and Technologies QuickCredit & Fair Isaac Liquid Scoring AEL utilizes The Max Finance System (MAX), a leading front-end management tool in leasing industry and Fair Isaac Liquid Scoring System, the standard and most highly respected scoring system in the industry Various Points of Application Entry Start application process via web, fax, or phone call Application Status on Web Business Partners have individual log-in to check status of applications submitted Back-Office Processing AEL handles all documentation, invoicing, etc. while working closely with Business Partners Fast Turnaround Time and Accuracy Closes Sales and Cements Relationships

5 Fair Isaac, Max Finance, and AEL Financial Partners in success Through the combination of the Fair Isaac Liquid Credit Scoring System and the Terra Vista Max Finance Quick Credit front end web based software programs, AEL Financial has been able to increase revenues from $14 Million to over $100 Million in less than 3 years. The increase has occurred primarily as a result of our ability to service our vendors and their customers in a highly efficient manner. Programs Focus on End-User Customer s Needs

6 Core Competencies Leasing and Structured Financing Products Target Markets Manufacturers / Distributors / Resellers of High-Technology Products Transaction Range Minimum of $10,000 and no upper-end limit Credit scoring utilized for transactions up to $100,000 mostly application-only Credit Turn Around Time (for transactions over $100,000, financials may be required for private companies) $10,000 - $100,000 Credit Scored, Instantaneous 15 seconds $75,000 - $250,000 Within 24 hours (complete credit package) $250,000 - $1 Million Within hours (complete credit package) Over $1 Million Within 5 business days (complete credit package) Experienced Team Working with Your Customers

7 Process Review 1. Log onto AEL or Vendor (optional) website 2. Click on link for financing quote 3. Input basic information on company and sales opportunity 4. Obtain estimate on monthly payments 5. Submit credit application Credit feedback provided instantaneously via Fair Isaac Liquid Credit Scoring System notification sent to AEL and Business Partner representatives Begin working on final credit and payment structure approval 6. Documents sent to customer 7. Signed documentation received by AEL 8. Confirming purchase order to Vendor 9. Invoice received by AEL 10. Lessee signs off Acceptance Document 11. Vendor funded

8 Next Steps QuickCredit demonstration Provide Vendor with user password to QuickCredit Look at scenarios: Lost sales Sales that may have been larger Look at current sales opportunities

9 Contact Information: C. Pete Peterson James G. Bailey Director of Sales President AEL Financial, LLC AEL Financial, LLC 8888 Keystone Crossing 600 N. Buffalo Grove Rd. Suite 1300 Buffalo Grove, IL Indianapolis, IN Phone: Fax:

10 VENDOR ONLINE -- LOGIN PAGE VENDOR ONLINE -- PROPOSAL PAGE Click to enter a new application Clicking on the header in the Blue bar area will sort all the application by the heading. Edit go into the application screens to make changes. View application has been submitted, no further changes can be made online. View summary. Delete Delete the application from Credit Status this column shows the status of the credit decision. Not Submitted means the application hasn t been submitted to the Max system Incomplete means credit reports have not been pulled or there were insufficient information to obtain a credit report or credit score. Pending means credit needs to be reviewed by credit person at the leasing company. Approved credit has been approved. 1

11 VENDOR ONLINE -- RATESHEET SCREEN There are three steps in this screen: 1. Fill out the form and Click on the Calculate button to display the payments. 2. Select the finance structure and monthly payment 3. A -- the lease term to the lessee OR B Complete the online application and submit Vendor select a supplier/vendor for the equipment from the drop down list or check the box New vendor to add a new supplier. If the Vendor field isn t listed, that means that a default vendor has been setup for this group. Do not type in $. Lease Start Date is the date the lease is expected to start. Type in the current date or any future date. AN ASTERISK * AT THE END OF THE FIELD NAME MEANS THAT ENTRY IS REQUIRED TO MOVE ON TO THE NEXT SCREEN. 2

12 VENDOR ONLINE -- NEW VENDOR SCREEN This screen only shows up if the user checked the box New Vendor in the previous Rate Sheet screen. In the previous screen, if you chose to the Lease Terms, go to page 4 of the instruction for more details. If you chose to Complete the Online application, go to page 3

13 In Step 3 of the Ratesheet screen, if you chose to Lease Term to Lessee, this is the next screen you would see: VENDOR ONLINE -- CREATE SCREEN Fill out the Lessee contact name and the address that you want to the terms to and click the button CREATE PROPOSAL. Click on SEND THIS to send the proposal to the lessee to fill out the rest of the application After you send the to the lessee, click on LOGOUT at the top of the screen to log out of the online application OR click on PROPOSAL tab to see the application list. 4

14 In Step 3 of the Ratesheet screen, if you chose to Complete the Online Application, this is the next screen you would see. This is also the screen that the lessee would see if they were to complete the application after receiving an lease proposal. VENDOR ONLINE APPLICATION Step 1-- COMPANY INFORMATION ( ) The fields with * at the end of the name are required fields. For the field Business Structure, if you select a business structure that is one of the categories listed below, you will need to provide principles/guarantor information in step 3: Closely Held Corporation Limited Liability Corp. Limited Liability Partnership Limited Partnership Partnership Proprietorship Subchapter S Corporation 5

15 VENDOR ONLINE APPLICATION Step 2 -- CONTACT INFORMATION ( () ) Fill out Lessee Contact information 6

16 VENDOR ONLINE APPLICATION Step 3-- PRINCIPALS/GUARANTOR Check the box Guarantor if the individual will be providing personal guaranty. If this box is not check, the leasing may not be able to conduct a proper credit check and approve the transaction. Check the box Aurthorized Signer to indicate the individual who will be signing the lease documents once the application is approved. 7

17 VENDOR ONLINE APPLICATION Step 4 CREDIT REFERENCES ( ) If the reference is not a checking or saving account reference, select other and indicate the type in the field Specify Other such as Trade, loan or lease reference 8

18 VENDOR ONLINE APPLICATION Step 5--REVIEW & SUBMIT SCREEN ( ) Review the information entered. To make changes to the application, click on previous screens. Otherwise click on to submit the application. to go back to the 9

19 VENDOR ONLINE APPLICATION Submission Confirmation Screen After the user clicks on, this screen will appear for the user to the terms of the submission. If they click on the Submit Application button, that means they agree to the terms. If the application was submitted successfully, a confirmation screen will appear and looks like this: 10

20 GENERAL ONLINE APPLICATION LOGIN SCREEN The General Online Application is usually attached to a APPLY ONLINE NOW type button at the website. This is where the lessee or anyone can go on and fill out an application on their own. The only information the lessee needs to enter to start the process is their address. Once an application is submitted the lessor will receive a notification and lessee will receive a confirmation thanking them for their application. APPLICATION SCREENS ARE THE SAME AS VENDOR ONLINE APPLICATION EXCEPT FOR: 1. THERE ISN T A RATESHEET SCREEN FOR USER TO CHOOSE THE RENT PAYMENT 2. THERE IS AN EXTRA APPLICATION SCREEN FOR USER TO ENTER ASSET AND VENDOR INFORMATION 11

21 GENERAL ONLINE APPLICATION EQUIPMENT & VENDOR PAGE CONFIRMATION TO THE LESSEE AFTER THEY SUBMIT GENERAL ONLINE APPLICATION 12

22 Contact Information: C. Pete Peterson James G. Bailey Director of Sales President AEL Financial, LLC AEL Financial, LLC 8888 Keystone Crossing 600 N. Buffalo Grove Rd. Suite 1300 Buffalo Grove, IL Indianapolis, IN Phone: Fax:

23 Achieving Greater Efficiency in the Lease Approval Process ELA Conference October 2006

24 Credit grantor objectives Business Objectives Increase profitable relationships Manage overall portfolio risk Streamline operations for improved cost efficiencies Maintain regulatory compliance Benefit of Scoring Allows SAFE portfolio growth Accurate risk prediction 80% of risk is identified at origination Faster turnaround times by focusing on tough decisions Consistent, objective decisions preferred by regulators

25 Making objective decisions Characteristic Years in Business Business DDA Balance Debt/Worth Cash/Total Assets Principal Income Credit Bureau Score # of Inquiries % Satisfactory on Bus. Report # Of Derogs. on Bus. Report Overall Decision Odds of Repayment Judgment Neutral Accept Unknown Scoring Accept 20:1

26 Increased efficiency gains Segment Applicant Population Automated Decline Automated Accept High Risk Medium Low Risk Risk Score and attributes

27 What decision do I make? Rules represent credit policies of the lender Bankruptcies Debt service ratio Transaction amount Industry Segmenting finer allows you to make better decisions

28 Small Business origination evolution Automated Decisioning SBSS SM solution 6.0 Today SBSS SM solution Models Early 90 s Judgmental 1 st Generation Models Mid 80 s Late 80 s # transactions amount financed understanding of risk operational efficiency

29 Total small business score Principal 1 Data Application Consumer Credit Bureau Report Principal 2 Data Application Consumer Credit Bureau Report Business Data Application Financials Business Credit Report Total Score 170

30 Leasing Model Performance

31 Savings using SBSS ,299 accounts scored $50,000 per bad account and half go to loss % Above Cutoff SBSS % SBSS 6.0 % Change 60% 0% % of Approved Bad Rate 1.4% 1.0% (29%) # Bads (56) Annual Savings $1.4M

32 SBSS Agricultural models overview 9 models Application information Consumer Credit Bureau information Business Bureau information Tailored for agricultural lenders Improvement in divergence over SBSS Scaled to the SBSS Models

33 Potential savings using SBSS Agricultural models CW2 47,000 accounts scored $35,000 per bad account and half go to loss SBSS Agricultural % Above Cutoff 50% 50% % of Approved % Change 0% Bad Rate 1.3% 1.1% (15%) # Bads (75) Annual Savings $1.3M

34 Slide 11 CW2 Should we add SBRI models to presentation. Paynet would be better but we have no data. Cordell Wise, 10/11/2006

35 SBSS SBRI models 51 models (37 are SBSS, 14 are SBRPS) Application information Consumer credit bureau information D&B and SBRI information Tailored to SBRI members Improvement in divergence Scaled to the SBSS models

36 SBSS-SBRI model performance Sample size: 14,000 known good and 2,600 known bad % 1 (Ascending Cumulative) % 0 (Ascending Cumulative)

37 Potential savings using SBSS- SBRI models 30,000 accounts scored $20,000 per bad account and half go to loss % Above Cutoff SBSS (CB+DB) 60% SBSS (CB+DB+SBRI) 60% % of Approved % Change 0% Bad Rate 2.9% 2.5% (14%) # Bads (114) Annual Savings $1.1M

38 Data effects on large transactions Divergence K-S Amount Requested Business Bureau Score SBSS 6.0 Business Bureau Score SBSS K-<100K K-200K K-750K

39 Start Up Origination Score Start Up is a subpopulation of small businesses Short history or no history Less data available Start Up score value Lower bad rate Improve acceptance rate Provide guideline for pricing Automate origination decision process

40 The Credit Life Cycle Prospect Solicitation Origination and Underwriting Account Management DECISIONS Target prospect? Tailor offer? Mail? Approve / decline? Tier pricing? Initial credit line? Monitor? Collect? Renew? Tier pricing? Line increase / decrease?

41 Decision Area DECISION KEYS Status Renewals Current Behavior Score Low Medium High SBSS Score High Low High Med Low Strategy C D A B D A Strategy A B C D Auto-renewal Request additional data New application Close

42 Has my portfolio changed? % Accounts Current Origination Low Score High

43 Beyond generic small business risk scores Today SBSS Scores (Leasing, Term loan, LOC, Commercial credit card) Start up models Credit Offer Index Portfolio behavior scoring Coming year end 2006 SBSS Agricultural models SBSS Canadian models SBSS - SBRI Models Coming Q Bankruptcy models Profiling models In development Other new data repositories models Fraud solutions

44 Why Fair Isaac? 50 yrs modeling experience Data neutral 15 yrs small business modeling Able to leverage all of FI capabilities SBSS Models Over 500 clients 22 of top 25 small business credit grantors Continued Investment Analytic support Regulatory Trust Extended Analytics

45 Achieving Greater Efficiency in the Lease Approval Process Questions and Answers You may also direct questions to Cordell Wise at: