CLFP Funding, Customer Service and Operations Questions With Answers Graded A+ Assured Success
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Module
CLFP Funding, Customer Service and Operations
Institution
CLFP Funding, Customer Service And Operations
Executed docs are audited to - ️️authenticate customer
ensure completeness
verify accuracy of docs
looks for signs of fraud as a mitigation check
Standard funding package included - ️️invoice, verification of executed docs,
insurance, delivery and acceptance (D&A), UCC, verbal verifica...
CLFP Funding, Customer Service and
Operations
Executed docs are audited to - ✔️✔️authenticate customer
ensure completeness
verify accuracy of docs
looks for signs of fraud as a mitigation check
Standard funding package included - ✔️✔️invoice, verification of executed docs,
insurance, delivery and acceptance (D&A), UCC, verbal verification, tax treatment,
equipment inspection, drivers license
Discounting - ✔️✔️The equipment finance company is the lessor - it sells off remaining
rents of a lease to a funding source but retains ownership of the leased equipment
discounting the future rents to their present value - used to determine the value of the
rents sold
External Factors considered for funding approach - ✔️✔️Conditions in the equity and
debt markets
Market Perceptions of the industry
6 methods of funding - ✔️✔️Internal Funding
Brokering
Discounting
Debt and Equity
Asset Securitization
Internal Funding - ✔️✔️Subsidiaries are often funded entirely by the parent financial
institution
Parent typically charges the leasing subsidiary an internal interest rate - cost of
borrowing
, Brokering - advantages and disadvantages - ✔️✔️brokers acts as intermediary
between the lessee and the funding source
Advantages: No economic risk except for representations and warranties in broker
agreement
No servicing platform required
Disadvantages: brokers profit limited to the upfront commission paid
servicing relationship is transferred to the funding source
Discounting transactions may be structured as - ✔️✔️a sale of the lease rental stream
to the funding source, or
a loan to the borrower by the funding source, secured by an assignment of the rental
stream
Advantages of Discounting - ✔️✔️lower cost of funds
greater flexibility
more control compared to brokering
brand identity is enhanced
lessor earns revenue related to servicing fees, late charges, etc.
Disadvantages of Discounting - ✔️✔️Representation and warranty clause's affect the
lessor
lessor bears the credit risk
lessor bears the equipment risk
Asset Securitization - ✔️✔️aggregation of similar types of assets, such as equipment
leases, into a legal structure and are used as collateral to support a bond or note
Advantages of Asset Securitization - ✔️✔️low cost of funds
scale and depth of funding - ability to borrower amounts larger than lines of credit allow
potential off-balance sheet treatment of debt
access to the capital markets
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