The vital role of the third party initiator in the trade finance sector


Third party originators (TPOs) play a crucial role for the customers and suppliers they serve and the partners who rely on their expertise and volume of business. Mutual funds that focus on equipment financing are a group of sophisticated entrepreneurs who care deeply about their customers, suppliers and financing partners. A large number of equipment finance mutual funds have experience working for large banks or sources of finance, but they have diversified due to their passion and willingness to start their own finance company or work for a smaller, more specialized finance company.

Benefits for sellers

Many vendor-focused OPCs focus on funding small to mid-sized vendors who truly value personal relationships and the opportunity to have a business that can help increase sales. These manufacturers and suppliers are generally off the radar of the big banks, but are important to the economy and must be served. The expertise of these vendors lies in selling the equipment, not financing, so they tend to be less concerned with cutting-edge technology platforms and custom programs. They just want someone they trust who will answer their call even outside of regular business hours and take care of their customer so they can close the sale. Some of my most successful vendor relationships are with vendor sales reps who have tech platforms and custom programs in place with the big banks, but they choose to send their customers to me because of the service. personalized and increased communication that I provide. These sales reps know that I don’t get paid if they don’t get paid and that I will work hard to find an option for their client to close the sale.

Since TPO offices are smaller, they are able to be nimble and move quickly when changes occur. The COVID-19 pandemic has provided a prime example of how this can be beneficial. Many large banks have stopped funding or have significantly changed their underwriting guidelines. While these underwriting changes have affected everyone in the industry, they have been particularly difficult for small and mid-sized vendors. OPCs quickly changed direction and found financial partners willing to help these suppliers with their customer inquiries.

The market disruption was a great opportunity for mutual funds to form partnerships with vendors who were unhappy with the changes in their current lending partners. Many TPOs have experienced significant growth during the pandemic as they have adapted to the changing needs of these vendors to secure new relationships.

Mutual funds have an important advantage to offer providers as they have a choice of multiple credit boxes and programs, allowing them to match each client in a program that matches their credit profile and specific needs. In addition, mutual funds have the opportunity to sell other products to increase their success. As mutual funds build relationships and consult with their clients, they discover needs that can be addressed by providing other financial products outside of equipment finance, including factoring lines, SBA loans, commercial real estate loans, commercial lines of credit and working capital. Working capital and trade credit programs have been a frequent demand recently due to supply chain issues in the market. Setting up a working capital loan or corporate LOC has provided these clients with the funds they need to stock up on inventory and / or purchase the items needed for a new contract or contract. new job.

Benefits for funding partners

OPCs are appreciated by the financial partners who support them for many reasons. First, TPOs cost less than hiring, training, and retaining an in-house sales team. Mutual funds are also more effective because they know how to properly control a transaction and ask the questions that will ensure that the full story is presented. In addition, mutual funds provide value to their financial partners by requesting the additional information needed to make a decision on an application, educating the end user on the differences between an equipment finance agreement and a lease, asking questions about the set of documents, explaining how early buyouts work and so on. In addition, mutual funds review new fraud claims and help their funding partners detect these fraudulent claims prior to funding.

UCIs also benefit a financial partner’s portfolio by helping to resolve fundraising issues. My former clients listen to me and trust me enough to call me back or answer the phone, even in difficult situations. In the rare event that collection issues arise, I have successfully stepped in to help my funding partners bring in one of my current clients or at least get them to contact the funding partner so they can get over the situation. . I have been brought in several times when the financing partner was ready to pass the client into default and was able to turn it around. In addition, TPOs value networking and education. As of September 1, 372 TPOs / donors had obtained their Certified Lease & Finance Professional designation and many more are involved in industry associations such as the American Association of Commercial Finance Brokers and the National Equipment Finance Association.

Mutual funds offer many benefits to their financial partners and, in turn, depend heavily on these financial partners, creating mutually beneficial relationships in which there is no bypass of suppliers or end users. In fact, there are funding sources in the market that have made a conscious decision to only deal with mutual funds, which gives those funding sources an advantage over those that choose a hybrid model. Finally, TPOs have a higher level of trust and loyalty to funding partners who only serve TPOs because they know their database will remain secure.

OPCs of the future

Technology continues to evolve in the commercial finance industry, and many banks are increasingly demanding more automation. Technology is a great advantage, but it will never completely replace a personal relationship. People always want to talk to real people who can answer their questions. Let’s be honest, how many of us hit “0” immediately when we come into contact with an automated system. I repeatedly hung up in frustration with automated phone systems when all I really wanted was to speak with a live person. American Financial Partners made the decision years ago not to have an automated phone system and to pay the added expense of having a real person answer the phone. It’s amazing how many compliments we get just by having a real person answer the phone.

TPOs have extensive experience and knowledge which is an asset to the commercial finance industry. The TPOs I know are some of the smartest, nicest, and hardest working people I have ever met; they are ethical, professional, efficient and should be considered elite members of the commercial finance industry. And, like me, they take great satisfaction in helping small and medium-sized businesses thrive and grow. Mutual funds will continue to play an important role in the trade finance industry for years to come.


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