Workflow Benefits More Than Just Small Ticket Lessors

  • Jay Mehra, COO


    Jay Mehra, COOOdessa Technologies, Inc
  • Jim Humphrey, SVP


    Jim Humphrey, SVPOdessa Technologies, Inc
  • Jeff Lezinski, SVP


    Jeff Lezinski, SVPOdessa Technologies, Inc
  • Keelie Fitzgerald


    Keelie Fitzgerald, VPOdessa Technologies, Inc
  • Madhu Natarajan


    Madhu Natarajan, CEOOdessa Technologies, Inc
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One of history’s most famous work flow systems was created by Henry Ford in 1903. Until then, cars were built one at a time, by hand. Ford revolutionized manufacturing and created the moving production line where workers at each point had a specific task to complete and each task was sequenced to make sure the entire process ran smoothly. The result was mass production of high quality cars at a low price. This unprecedented expediency and productivity was indeed a milestone in manufacturing. But the true power of the concept of workflow really lied in its sheer applicability. Any repetitive process regardless of the industry can benefit from an intelligent application of workflow.

The concept of workflow automation is not new to the leasing industry. Small ticket lessors pioneered the concept many years ago. Success in their market depends on processing large volumes of cookie cutter transactions, providing fast turnaround and minimizing handling costs, a model naturally suited to automation. Indeed, over the last ten years, a number of lease management systems with workflow capabilities were developed to help automate pricing, score transactions, make credit decisions, generate documents and book small ticket transactions. Despite the pervasiveness of workflow automation in this segment, however, it has yet to make inroads into the middle and large ticket segments of the industry.

While the nature of the processes performed by middle market and large ticket lessors are dramatically different than their small ticket counterparts, it is arguable that their success is also dependent on the expediency of their service and keeping their costs under control. Of course, in addition, a middle market/large ticket leasing company’s value proposition is also based upon differentiation by providing more customized and sophisticated products, a high degree of customer service and intimate knowledge of the assets being leased.

Leasing companies that specialize in assets such as Information Technology and Medical equipment, for example, thrive on these very factors. Many of their customers choose leasing for non-financial as much as financial reasons. The lease agreements they enter into involve millions of dollars and often hundreds or even thousands of assets. These customers place a high value on the ability of the lessor to ensure that the equipment ordered meets policy, manage the delivery and acceptance process, and efficiently make payments to large numbers of vendors. They want help tracking assets that are delivered to numerous locations and may be relocated several times, with implications, including for billing (based on domicile), and sales/use and property taxes. They want the flexibility to upgrade technology as needed, and assistance in the disposition of technology early in the event of a downsizing or upon final lease expiration.

Historically, the successful delivery of these services has been dependent upon having a very experienced staff. The obvious and inherent drawback is a dependency strongly biased towards people over processes. Average tenure quickly becomes instrumental to success and, in many cases directly restricts growth; the company can only grow as fast as its ability to train others regarding all the nuances of the existing practices – most of which, ironically, presupposes experienced staff. Relying on employees to perform tasks that could be automated increases labor expense, introduces the risk of error and leaves knowledge and best practices undocumented.

Just as manufacturing processes have changed dramatically from Ford’s early linear design, lease management workflow systems have evolved to support more than small ticket transactions. A state of the art lease management system with sophisticated workflow features and functionality can provide the tools necessary to automate these processes, can introduce a greater expediency and productivity and consequently can even enhance competitive advantages. That said, in order to realize this vision, the workflow must facilitate collaboration and be highly flexible in order to support the most unique and complex business processes.

To achieve collaboration between all the parties to the process; the leasing company, the vendors, and the lessee, the design should be such that the application is built to be communication-ready. This is exactly what the Services Oriented Architecture (SOA) approach to designing leasing software brings to the table. SOA is a conceptual approach to design that essentially breaks down and streamlines functionality into services that are made ready for integration. What makes this approach truly powerful is that each service acts in exactly the same manner whether it is called from within the application or from any other outside system. In other words, each service is integration-ready by design.

Given the accessibility of services under the SOA design, key business partners and stakeholders in the “lease value chain” can be tied-in through natural extensions of the lease management system itself. Services can be adjusted to be exposed to outside parties, giving external users the same functional ability as internal ones. For instance, as discussed above, the function to change the location of a given asset could be bundled into a service. Certainly, this service can be invoked from within relevant parts of the core lease management application. But it can also be exposed to a ‘customer-portal’ from where customers can avail themselves of the same service, independently. Other business partners, such as funding sources, vendors, remarketing auction-sites, insurance companies, etc. can be similarly tied-in into the lease management system wherever relevant by exposing the appropriate services for their consumption. Allowing stakeholders to serve themselves not only adds efficiency to the leasing company but, by extension, also enhances the productivity of the “lease value chain” itself. And the beauty of the SOA approach is that such extensions do not have to be known at the time of design and can progressively be added over time, as desired.

In addition, the ability to customize the application is also crucial. The application should be designed so that it is easily customizable to fit the exact requirements of each lessor’s business model. Since no two businesses are exactly alike, the software that drives them should not be either. The flexibility of the workflow should allow for the mimicking of any decision-oriented workflow process, no matter how complex and the interface should be easily modified to fit even unique business requirements. When this is combined with comprehensive document management, tracking and condition/business rules application, workflow becomes a powerful tool. It automates the whole process within the organization. This lends itself naturally to a high degree of control over processes followed, including specific roles and access rights of users. At any given point, managers can, for instance, assess accurately where a transaction stands, what payments need to be approved, their stage in the approval process and any related impact on cash-flow. Performance can be appraised based on accurate and real time funding and booking data or the length of time a particular role/user took to make certain types of decisions. The workflow system, therefore, not only allows for the automation of workflows, but given its data-richness, it is also a natural control and planning tool for the entire organization.

With these tools, a highly asset intensive middle market/big ticket lessor can truly transform their business. For example, once a multi-million dollar line of credit is approved, vendors can be instructed to submit invoices directly to the leasing company. The lease management system workflow controls access to the proper modules such as lessee acceptance aimed at tracking and managing the delivery of assets and the generation and management of certificates of acceptance to be signed by the customer. In turn, the acceptance module is tightly integrated with accounts payable decisions (such as eligibility for a check request, etc.) and additional lease management decisions such as the triggering of lease inception or the beginning of interim rent billing, etc. Key functionality includes:

  • Order Tracking

    • Tied to both Applications Processing and Accounts Payable
    • Only after asset has been accepted can vendor invoice become eligible for payment
    • Track assets individually on a given, multiple-asset invoice, across schedules
  • Generate Certificates of Acceptance

    • Automatically generate Certificates of Acceptance from vendor invoices
    • Re-format invoices to show desired level of detail
    • Rearrange line items with ease for more elegant presentation to customers
  • Asset Tracking

    • Tie-in assets from vendor invoices to lease schedules
    • Track “Parent-Child” asset relationships
    • Track assets rejected by customer and log reasons for return with tie-in to Accounts Payable

At each step in the process, workflow rules help the user track the amount of credit remaining under the line, the categorization of assets and proper calculation of lease payments, if actual hardware and software delivered meets conditions of approval and pricing and store the required asset level details necessary for proper accounting, sales/use and property tax calculations, accurate customer reporting and future decisions regarding upgrades, re-deployment or return of assets.

In the current dynamic and turbulent global economy, a lease management system cannot exist as a loose collection of information silos. A state of the art lease management system with customizable, flexible and sophisticated workflow functionality provides a true competitive advantage for any leasing company, regardless of the markets they serve. In fact, even if a leasing system is functionally rich, there is always some level of integration and interfacing needed with other co-existing systems. Whether the goal is greater employee productivity, closer and more automated relationships with customers, vendors and other business partners, or simply more efficient decision-making, a workflow enabled lease management system dramatically increases the probability for success.