Tips From Tibbs: Vendor Marketing Guide

The fine line between being successful and being stagnant in the equipment finance industry can easily be determined by vendor relationships. Cheryl Tibbs (CEO/Owner at Equipment Lease Co.), a veteran in the field, recently released her Vendor Marketing Guide this past October. The ten-chapter booklet covers various aspects, including vendor marketing, contact building, crafting value propositions, and more.

Vendors are businesses authorized to sell equipment to end-users, Tibbs explains, and establishing a relationship with them can take a broker that is used to hunting for individual deals to instead being the recipient of multiple deals per week. But how to get that business is where most brokers get stuck.

“I think a lot of brokers get stuck with, ‘Well, how do I find vendors and what exactly is a vendor?’” she told deBanked. “I think that chapter three sticks out in particular, just making contact, knowing how to find a vendor, what to say when you get a vendor on the hook, and how to engage with that vendor.”

Tibbs said that brokers often assume that vendors already have a bank in-house when that is not always the case. This thinking might also lead them to shoot too low even when they do solicit them.

“A lot of equipment brokers they market to vendors and say, ‘Hey, send me the stuff that your people won’t finance’ and I think if you ask for trash, you’re going to get trash,” said Tibbs. If a relationship is built properly, a broker can get the vendor’s A-paper clients, she added.

Not only does the guide breakdown vendor relationships but also provides examples of how to pursue them, whether it be email, in-person, etc. The guide is not where education ends for brokers, however. Tibbs believes it’s an on-going learning experience.

“I think if you’re making money and you’re building these relationships, that’s motivation in and of itself, to continue to sharpen your knowledge with regard to this,” she said.

Leveraging ChatGPT for Maximum Productivity

“…It’s just been pretty impressive how we have this technology that came out that has literally changed everything, and it was almost overnight,” said Kareem Jernigan, CFO at Leasing Associates Inc.

Earlier this week the Black Equipment Finance Network (BEFN) hosted a webinar titled ‘Leveraging ChatGPT for Maximum Productivity’ for the equipment finance space. The panelists were Cheryl Tibbs, George Parker, and Kareem Jernigan.

Jernigan is already using ChatGPT in his daily work life. In one example, he said that he commonly uses it to analyze and find errors in spreadsheets. In another, he’s saving a lot of the time he normally spent on writing.

“…I also run HR, and so I have to craft communications and/or policies,” he said, “so, when you think of crafting a policy or a communication that you have to send out, before ChatGPT that would be something that would take 4 or 5 hours to do. […] That task today I could get that done in 30 minutes.”

Meanwhile, George Parker, Co-CEO at VenSource Capital, said “You can use ChatGPT with training staff. You can develop training material. You can give tests and quizzes. You can design training programs with time as an element, it can do all of that. You can even design courses with ChatGPT. You can tell ChatGPT to come up with a time frame for learning each part of a subject.”

Parker added that ChatGPT can be used for brainstorming, articles, planning, meeting content, customer service responses, and more.

Even in the finer details of equipment financing itself, the panelists said that ChatGPT can produce credit assessment profiles and analysis, analyze and summarize financial data, and scrutinize contracts,

Of course, all of this only works if one understands what to put in and takes the care to evaluate what comes out. It’s all about the proper “prompt.” One example offered of a prompt that wouldn’t work is: “teach me credit analysis.” Something like that would be too vague and would result in a response that was too broad. Part of the reason there are panels and webinars about ChatGPT to begin with is so the industry can learn how to leverage it for maximum productivity.

The Buck in Trucking

“If you don’t have the marketplace of lenders, yes, it can be problematic,” said Cheryl Tibbs, Owner/CEO at Equipment Lease Co about providing capital to the trucking industry. “If you don’t understand the trucking industry, it can be very problematic.”

In the last year, there has been an increasing interest in equipment financing. It was the primary topic of a panel discussion at Broker Fair and the subject of several sidebar conversations throughout the day and thereafter. For Tibbs, who lives and breathes equipment finance and trucking, she said she doesn’t see funding in that space slowing down.

“Every business that’s in business needs some type of equipment to operate,” said Tibbs. “Whether it’s a cell phone, a POS system, a car or truck, excavator, whatever it is, every business has some type of equipment. So I don’t see the industry slowing down at all.”

Tibbs, for her part, says that some companies in her lender network can provide a uniquely beneficial solution, a funding bundle that is part equipment finance and part working capital.

“Some of those customers may need that working capital for a down payment or if you’re buying a truck, for instance,” Tibbs said. “And this working capital comes in handy because if you know anything about trucking, the insurance on those things can be– I’ve seen it go as high as 60,000 a year, almost half the cost of a truck. So that working capital comes in handy.”

And the costs of trucks is in a state of flux. Jonathan Nelson, General Counsel at Dedicated Financial GBC, said the costs of used trucks is rapidly shifting.

“This month, you could get $20,000 for this particular used truck on the East Coast and next month, if you were to sell it on the West Coast, you might get $40,000,” said Nelson. “It’s very volatile at the moment.”

Evan Sowa, Senior Finance Manager at Everlasting Capital, echoed same.

“Depending on the geographical market, prices on the same truck can vary substantially,” he said. “Market prices are as high as I have ever seen them, up to 80% higher than similar units 4 years ago.”

Sowa continued by explaining that demand and prices in the used truck market have been booming but that they’re finally starting to cool off.

David Lee, CEO at North Mill Equipment Finance, said there are some issues in the wider trucking market right now.

“The trucking industry is facing a lot of challenges currently,” Lee said. “In addition to supply disruptions, and an inflation in used asset values and unavailability of newly manufactured equipment combined with significant increases in diesel fuel costs, a number of operators have felt tremendous margin pressure, with load rates having decreased, the cost of the equipment being higher, and the cost of operating the equipment via fuel being higher.”

A lot of those costs have not been able to be passed on to shippers, Lee added, and he said that they’re seeing a material increase in delinquencies and defaults amongst trucking operators.

Nelson at Dedicated, speaking on a much broader level of equipment finance, said that in general the industry has been able to escape the wave of defaults happening in other industries.

“We are a part of the National Equipment Finance Association and the Equipment Leasing and Finance Association to make sure that we understand issues and different trends that are happening in the equipment finance industry, because that’s where most of our clients are,” he said.

Tibbs, who’s a super broker, explained that she has seen lenders and funders tighten up their guidelines post covid.

“It’s not as easy to get plugged in with certain lenders,” she said. “It’s not as easy to get certain deals approved that we probably could have gotten approved pre-pandemic.”

Because of her experience and relationships, however, Tibbs is optimistic about the kind of deals she can get done, especially over newcomers who are at a disadvantage, explaining that she can finance pretty much anybody.

Evan Sowa at Everlasting summed up the state of things as such.

“Still funding trucks every day but the market is crazy right now,” he said.