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Captive & Vendor Finance

No lease exists unless a manufacturer sells a piece of equipment; financing facilitates the sale; so manufacturers’ captive finance companies form a major sector of the industry. The opportunities, pressures & challenges facing manufacturers and their finance operations are very different from those experienced by the bank subsidiary and independent companies. The difference shows, for example, with sales made indirectly through agents or business partners. Properly exploited, financed sales change channel sales economics, to improve both margins and cash flow.

Usually channel financing rates are lower than direct sales rates. This is a critical improvement opportunity for a captive and its parent: when the financing rate improves a more profitable channel with improved cash flow will tend to grow faster. Our advisory services include:

  • New Market entry and the creation of new captives.
  • Channel development.
  • Regulation across Europe.
  • Preparing for new lease accounting standards.
  • Selecting an outsourced financing partner.
  • Outsourcing to improve efficiency & effectiveness.
  • Benchmarking.

IAA has a continuing relationship with captives via the Captives Forum. Alan Leesmith, IAA Director International, is its Company Secretary.

The Captives Forum is an innovative trade association

Formally named The Forum of Manufacturer’s Sales Finance Companies Limited, the Captives Forum is a Europe-wide association which brings together the finance subsidiaries of many of the world’s major manufacturing companies.
Captive financiers have their own perspective & particular issues which are neither represented by manufacturers’ general associations, nor by banking financing specialist groups. The Captives’ Forum exists to redress this balance when, for example, regulation or accounting standards are discussed.

The Captives’ Forum also undertakes research and analysis of the captive financing industry, provides a forum to exchange non-competitive ideas, and generally tries to promote the value it adds to the economy.
Members include: Caterpillar, Dell Financial services, Heidelberg, HP Financial Services, IBM Global Financing, John Deere,, MAN, Philips Capital, Pitney Bowes, Scania, Xerox.

To find out more, contact Alan Leesmith.