Month: October 2016

In the words of General George S. Patton, “Accept the challenges so that you may feel the exhilaration of victory.” The 2016 U.S. presidential election was undeniably a challenging assignment for the American people. With the deadline set for November, the turbulence, volatility, and polarization made it impossible to predict the ultimate outcome. In this blog post, we will delve into the unforgettable events of the 2016 presidential election, exploring the rise of candidates like Donald Trump and Hillary Clinton, their controversies, and the potential implications of a Clinton administration.

The Polarizing Race: Donald Trump and Hillary Clinton

As we explore the 2016 U.S. presidential election, it’s impossible to ignore the two prominent candidates that took center stage: Donald Trump and Hillary Clinton. The American voters found themselves in an unprecedented situation, with both candidates garnering high unfavorable ratings. According to an ABC News/Washington Post poll, Clinton received 59% unfavorable ratings, while Trump received 60%. The dissatisfaction with the mainstream options left many voters yearning for something different, fueling a rise in candidates like Bernie Sanders, who resonated with passionate supporters.

Donald Trump’s Unconventional Campaign

Donald Trump’s entry into the race was nothing short of unconventional. Since announcing his candidacy in June 2015, he garnered support through bold promises and provocative statements. Many believed that Trump was Teflon-coated, as he seemed to shrug off controversies that would have ended other candidates’ campaigns. However, as the election progressed, some of that Teflon seemed to crack, leading to prominent Republicans denouncing him and stating they would not support him.

Trump’s refusal to back down from his contentious remarks and fiery demeanor only deepened the polarization of American voters. The election seemed to become a battle of ideologies and personal values, rather than a debate on policy and governance.

Hillary Clinton: The Career Candidate

On the other side of the race stood Hillary Clinton, a candidate with a long political career. Having been involved in the political landscape for more than two decades, Clinton’s determination to become the president was evident. She had weathered various controversies throughout her career, including the infamous email scandal and the Benghazi incident.

Clinton’s long journey to the presidency led to perceptions of her as a “career candidate.” This perception, combined with her carefully managed public persona, posed both challenges and opportunities in her campaign. She had to appeal to a wide range of voters while also addressing the demands of passionate Sanders supporters who sought a more progressive agenda.

The Implications of a Clinton Administration

With the presidential election reaching its crescendo, the likelihood of Hillary Clinton securing the victory appeared strong. Assuming she was to assume the presidency, what could Americans expect from a Clinton administration?

1. Supreme Court Nominations: One of the most significant impacts of a Clinton presidency would be her ability to shape the Supreme Court. With potential vacancies, she would likely nominate liberal justices, adding her mark to the court’s future decisions.
2. Fiscal Policy and the Federal Reserve: Clinton was not likely to rock the boat with the Federal Reserve. Expect fiscal policy to favor a gradual increase in interest rates while keeping inflation and joblessness in check.
3. Foreign Policy and National Security: With the Middle East posing significant challenges, Clinton would likely appoint experienced leaders to handle foreign policy and national security. Bipartisan support for key positions would be crucial in navigating international affairs.
4. Accommodating Sanders’ Influence: Bernie Sanders’ influence on the campaign pushed Clinton to adopt some of his platform points. She may not make public education entirely free, but she could seek a solution that appeases Sanders’ supporters.
5. Economic Growth and Taxes: With a history of fiscal discipline and deficit reduction, Clinton’s administration could see economic growth and a push for tax code revamp and simplification. Her proposal for a 4% surtax on the ultra-rich may come into play.

The 2016 U.S. presidential election will forever be etched in the memories of American citizens. The rise of Donald Trump, the formidable candidacy of Hillary Clinton, and the intense polarization of the electorate created a rollercoaster of emotions. As the election approached, Clinton’s chances of winning appeared strong, potentially leading to a Clinton administration with implications across various sectors. Only time would tell how history would remember this momentous chapter in American politics.

In 2015, a groundbreaking study by the Equipment Leasing & Finance Foundation (ELFF) shed light on the increasing prevalence of equipment financing among businesses. The research indicates that a remarkable 78% of companies used some form of financing when acquiring equipment, marking a significant uptick from the 2012 study. This rise in equipment financing points to a growing propensity among businesses to leverage funding options.

Moreover, the study revealed that total investment in equipment and software grew to $1.5 trillion in 2015, with equipment financing forecasted to reach $1.03 trillion in 2016. The report also delves into the factors influencing this trend, such as excess liquidity and strong competition, leading to lower borrowing costs. Additionally, the emergence of fintech companies in the leasing and financing industry has contributed to the digitalization of lending processes. Let’s explore the study’s key highlights and insights in further detail.

The Growing Equipment Financing Trend
The ELFF study’s most notable finding is the increase in equipment financing adoption among businesses. In 2015, a staggering 78% of companies utilized some form of financing to acquire equipment, up from 72% in the previous market study in 2012. This substantial rise demonstrates a growing reliance on financing solutions to facilitate equipment purchases.

Among the financed equipment, 39% utilized leasing, 16% opted for secured loans, and 13% used lines of credit. This shift toward leasing and secured loans marks a significant change from 2011 when they constituted only 17% and 9% of total financing, respectively. Conversely, the use of lines of credit decreased to 13% from 29% in 2012.

Factors Driving the Equipment Financing Trend
The study identifies several key factors driving the surge in equipment financing:

1. Excess Liquidity and Low Borrowing Costs: Excess global capacity, low commodity prices, a strong dollar, and sluggish export markets have contributed to a surplus of liquidity. As a result, lenders are engaged in intense competition, offering attractive borrowing rates to businesses, making financing equipment acquisitions especially appealing.
2. Capital Investment Challenges: The collapse in drilling for oil and natural gas has hindered capital investments in certain industries, leading companies to turn to financing options for equipment procurement.
3. Shift in Bank Financing: While banks remain the primary lenders across all equipment types, the share of bank financing declined from 57% in 2012 to 47% in 2015. However, banks have continued to focus on financing companies with lower risk profiles, reducing financing for less profitable businesses.

Future Projections for the Equipment Finance Market
The ELFF study also includes projections for the equipment finance market, highlighting the anticipated growth in the coming years. By 2017, investment in equipment and software is expected to accelerate at a 3.0% rate, reaching $1.8 trillion by 2020. The equipment finance market, including software, is predicted to grow from $1.02 trillion in 2015 to $1.03 trillion in 2016 and to $1.24 trillion in 2020.

The Role of Fintech Companies
The emergence of fintech companies has been a notable development in the equipment leasing and financing industry. Fintech companies have driven faster adoption of technology and contributed to the digitalization of the lending process, making it more efficient and accessible for businesses seeking financing options.

Impact of New Lease Accounting Standards
As of December 2018, new lease accounting standards require lessees to recognize assets and liabilities for leases with terms exceeding 12 months. Industry experts anticipate minimal impact on the demand for leasing, as firms have been preparing for the changes for years.

The ELFF study underscores the growing trend of equipment financing among businesses, with a significant increase in reliance on financing options to acquire equipment. Factors such as excess liquidity, low borrowing costs, and shifts in bank financing have contributed to this upward trajectory. Moreover, the rise of fintech companies has brought about digital transformation in the lending process. As the equipment finance market continues to grow, businesses are likely to leverage financing solutions to acquire capital assets, enabling them to operate and expand their operations effectively.

The FASB lease accounting standard (ASC 842) has finally arrived, bringing significant changes to how companies report lease-related obligations on their balance sheets. While the official implementation deadline for public and non-publicly traded companies is on or after December 15, 2018, and December 15, 2019, respectively, it is crucial for businesses to start preparing for this transition as soon as possible. In this article, we will delve into the key aspects of the new lease accounting rules and provide management with valuable insights to develop a preliminary plan for implementation.

What’s New Under ASC 842?

Under the new lease accounting rules, all obligations related to the use of tangible assets, except for rare exceptions, must be recorded as assets and liabilities on the lessee’s balance sheet. This requirement applies to all transactions, regardless of lease classification, making it a significant change from the previous standards. The three primary lease classifications that remain are finance leases, operating leases, and sales type leases, with the latter pertaining to lessor reporting.

Lessor accounting has not undergone significant changes, except for the loss of the leveraged-lease accounting model. Our focus here will be on lessee-side reporting for finance and operating leases.

Finance leases and operating leases both require legally binding obligations extending beyond one year to be recorded as right-of-use assets (ROU) and corresponding legal liabilities on the balance sheet. These obligations are measured at their present value amounts to ensure comparability for analysis and credit purposes. Interestingly, the classification of a lease as either finance or operating does not affect the balance sheet treatment. Both types of leases are recorded in the same amount, regardless of how they are “cast” or interpreted. The significance of casting diminishes as leases are now required to appear on the balance sheet, eliminating the distinction from a reporting perspective.

Key Considerations for Management Preparation

Discovery Phase

One of the initial challenges in implementing ASC 842 is locating all off-balance sheet leases. It is essential to conduct a comprehensive search for equipment and real estate leases, and this may involve engaging a central project leader to oversee the process. Some potential sources for locating leases include reviewing payment records, sending out questionnaires to key equipment users and real estate occupants, and examining property tax returns. Organizing the control structure to align with equipment locations can also facilitate the discovery process and create an organized trail.

Data Abstraction

Once a list of off-balance sheet equipment contracts is compiled, the next step is to gather relevant information on ROU assets and the associated legal agreements. This data should be collated and reviewed by someone familiar with the ASC 842 pronouncement and discounted cash flow techniques. Deciding on the appropriate lease classification (operating or finance) based on the contract terms can be outsourced to accounting firms to ensure accuracy.

Assembly, Review, Codification, and Classification

The gathered data must be sorted and analyzed, and this process requires a deep understanding of the ASC 842 pronouncement and discounted cash flow concepts. The classification of leases as either operating or finance will significantly impact the subsequent accounting treatment, making it crucial to determine this accurately.

Understanding the Technical Aspects of Lessee Reporting

Operating Leases

For operating leases, the ROU asset balance is amortized by computing the total payments (gross cost), dividing it by the lease term to calculate periodic amortization, and subtracting the presumed interest element. The gross rent remains the same in the P&L statement, while the interest element is measured by the internal rate of return (IRR) amortization schedule. The hybrid number created due to the combination of straight-line and IRR computations complicates the operating lease model.

Finance Leases

In finance leases, the ROU asset balance is the same as in operating leases but is amortized using a straight-line method based on the net equipment cost in the P&L. This results in slightly different ROU asset balances compared to operating leases and the IRR principal balance. Interest is charged to the P&L as per the IRR amortization schedule, leading to a front-loading of expenses due to the higher early-term debt.

A Simpler Approach?

While the groundwork for lease reporting must be done, there is a potential for simplifying the recording mechanics using a portfolio approach, as suggested in “Portfolio Exception” of ASC 842. By treating multiple transactions starting and ending at various dates as a single cash flow, companies can save time and effort while maintaining organization. This approach can smooth out the impact of adding new transactions to the financial statements and provide greater control over the lease accounting process. Although this concept requires further exploration and definition of deal similarities, it holds promise as a valuable alternative to streamline lease reporting.

The implementation of the FASB lease accounting standard (ASC 842) brings significant changes to lessee-side balance sheet reporting. By understanding the new rules and taking proactive steps to discover and abstract lease data, management can effectively prepare for this transition. Additionally, considering alternative approaches such as the portfolio method can potentially simplify the accounting mechanics, leading to more streamlined and efficient reporting. As the implementation deadline approaches, companies should prioritize compliance and seize this opportunity to improve their lease accounting processes.

In recent years, cloud-based solutions have revolutionized the business landscape, offering unprecedented opportunities for enhanced efficiency, cost savings, and rapid scalability. Despite these advantages, the leasing industry has been somewhat resistant to adopting cloud deployments. In this article, we’ll explore the reasons behind this hesitancy and shed light on the potential benefits that financial institutions can gain by embracing cloud technology. Additionally, we’ll discuss the various cloud deployment options available to cater to specific business needs.

The Cloud’s Paradigm Shift and Industry Resistance
The traditional cost of enterprise software, coupled with stringent regulatory policies, has made the leasing industry hesitant to adopt cloud-based solutions. However, the introduction of Software as a Service (SaaS) and cloud deployment has significantly reduced costs and risks associated with data-intensive systems. Despite this, many financial institutions have been reluctant to make the shift, fearing the complexities of negotiating regulatory policies for cloud deployment.

The Cost-Effective and Low-Risk Solution
Moving to the cloud offers financial institutions numerous advantages that can reshape their operations for years to come. By leveraging cloud-based solutions, businesses can deploy data-intensive systems at a fraction of the cost and with lower risk. Embracing the cloud can prove to be a pivotal decision for enhancing operational efficiency and maintaining a competitive edge.

Learning from Nokia’s Mistake
The cautionary tale of Nokia’s reluctance to adapt to emerging technologies highlights the consequences of sticking to outdated practices. Just as Nokia’s dominance in the telecom market was overtaken by Apple and Android, financial institutions must stay ahead of the curve to remain relevant and thrive in the digital age.

Demystifying Cloud Integration Misconceptions
Several misconceptions have contributed to the reluctance in adopting cloud-based solutions:

1. Challenging Cost Savings Illustration: Due to variations in business practices, organizations find it challenging to demonstrate precise cost savings when integrating the cloud. However, a careful evaluation can reveal significant financial benefits.

2. Hype vs. Purpose: Companies sometimes get caught up in the hype surrounding cloud computing, losing sight of its core purpose. Instead, businesses should focus on selecting cloud solutions that align with their specific business challenges and requirements.

3. Scaling and Governance Concerns: Companies may believe that cloud integration requires a massive overhaul of workflows and governance. However, the cloud can be integrated on a smaller scale, tailored to business needs and existing governance.

Evaluating the Impact of Cloud Integration
Adopting cloud computing is a process that demands careful evaluation of its impact on a company’s operations in the long run. The ability to streamline efficiency, reduce costs, and enhance productivity makes cloud integration an opportunity that financial institutions should seriously consider.

Overcoming Challenges in Cloud Deployment for Finance and Leasing Industry
The finance and leasing industry faces unique challenges in adopting cloud-based solutions, primarily concerning regulatory compliance and varying internal best practices. However, proven implementations by industry leaders like NetSol demonstrate that these challenges can be overcome.

Three Major Cloud Deployment Options
Financial institutions have multiple deployment options to choose from when integrating the cloud:

1. Onsite Installation: Involves upfront costs for hardware, software, and implementation, as well as continuous costs for maintenance and support.
2. Public Cloud Hosted at Vendor Server: Requires upfront implementation costs and continuous monthly subscriptions, with the vendor managing the environment.
3. Private Cloud: A hybrid model where the vendor hosts the environment, but the customer handles management, offering greater flexibility and adherence to security regulations.

The leasing industry’s initial reluctance to adopt cloud-based solutions is understandable given the complexities of regulatory compliance and varying best practices. However, as cloud providers better understand the industry’s needs and businesses recognize the advantages of cloud integration, more financial institutions will move towards cloud deployments. To remain competitive in the evolving business landscape, embracing cloud technology is not an option but a necessity. The potential benefits of enhanced efficiency, reduced costs, and streamlined processes are too significant to ignore. As financial institutions continue to explore the cloud’s potential, they will unlock new possibilities for growth and success in the information age.

In today’s competitive business world, effective communication is crucial to success, especially during the sales process. Whether you’re reaching out through emails, texts, or calls, the tone of your communication and persuasive techniques play a vital role. Surprisingly, over 90% of our daily interactions involve some form of selling. However, successful persuasion requires careful planning, understanding your audience, and crafting compelling messages. In this blog post, we will explore the AIDA model – Attention, Interest, Desire, and Action – to help you become a masterful persuasive communicator. So, let’s dive into the keys to persuasive messaging and how you can apply the AIDA model to enhance your sales techniques.

Attention: Captivate Your Audience
The first step in persuasive communication is grabbing your audience’s attention. In a world filled with constant distractions, it’s essential to stand out from the crowd. One way to do this is by crafting attention-grabbing subject lines in emails or captivating opening statements during a call. Share a compelling statistic, a thought-provoking question, or an intriguing story related to your product or service.

Interest: Engage Your Audience
Once you have their attention, it’s time to pique their interest. Address the “What’s in it for me?” question that’s likely on their minds. Provide concrete examples of how your offering has helped others achieve remarkable results. Use real-life success stories or case studies to demonstrate the value of your product or service. Show how it can solve specific problems or improve their lives. By making your message relevant and relatable, you keep your audience engaged.

Desire: Ignite the Desire to Act
The desire stage is crucial for converting interest into action. Focus on creating an emotional connection with your audience, making them yearn for the benefits your product or service can bring. Appeal to their aspirations, goals, and dreams. Offer limited-time deals or exclusive offers to create a sense of urgency. Clearly communicate the unique selling points of your offering and explain why it’s superior to competitors. Use persuasive language that evokes emotion and compels your audience to take the next step.

Action: Call to Action
The final step in the AIDA model is the call to action (CTA). Clearly instruct your audience on what you want them to do next. Whether it’s filling out a contact form, scheduling a meeting, or making a purchase, be explicit and straightforward. Use action-oriented words like “Register Now,” “Get Started,” or “Claim Your Discount Today.” Ensure that your CTA is prominently placed and easily accessible.

Applying AIDA in Sales Communication
Let’s apply the AIDA model to a common sales scenario – seeking referrals from LinkedIn connections.

Before:
“Hi all, I want to connect with others in this group who require our service. Can you help me? Please take a look at my profile and refer me to your friends. Thank you.”

After (using AIDA):
Subject Line: Achieve Unprecedented Success with Our Free Consultation!

Attention: Free Consulting (ATTENTION Grabber)
“Unlock the potential for unprecedented success with our simple and low-cost processes! Join the 80% of clients who have already achieved remarkable results.”

Interest: Achieving Unprecedented Success (INTEREST)
“Imagine transforming your business with our proven strategies. In just 30 minutes, our consultation will reveal how we’ve helped numerous others achieve their desired outcomes.”

Desire: A Personalized Approach (DESIRE)
“Be among the first 50 respondents, and we’ll schedule your exclusive, free consultation. Don’t miss this opportunity to leverage our expertise for your success. Visit www.persuademe.com today!”

Action: Take the Next Step (ACTION)
“Take action now and revolutionize your business. Click here to claim your free consultation and propel your success journey.”

Mastering the art of persuasive communication during the sales process is essential for success in today’s competitive business world. By using the AIDA model – Attention, Interest, Desire, and Action – you can craft compelling messages that resonate with your audience and drive them to take action. Remember to always consider your audience, tailor your messages accordingly, and use persuasive language to create emotional connections. With practice and dedication, you’ll become a persuasive communicator capable of achieving outstanding results in your sales endeavors.