Despite the economic uncertainty that has come with the global pandemic, credit and collections experts shared cautious optimism in a recent article in Equipment Leasing & Finance magazine.
"Before the pandemic, we were all awaiting the next downturn," said Sarah Palmer, Senior Vice President, Credit Underwriting & Asset Management at Key Equipment Finance, in the article by Susan L. Hodges. "But few of us expected a sharp contraction that drove massive disruptions in business activity. Thankfully, the federal government stepped in to provide stimulus that has kept a lot of businesses afloat. So, although we expected an unprecedented number of defaults, we haven’t seen the widespread failures that we thought might happen."
Palmer, one of four credit and collections experts interviewed for the article, said Key Equipment Finance will still be cautious, but added, "Now that there are vaccines against COVID-19, we see the potential for businesses to regain confidence and move forward—a proverbial light at the end of the tunnel."
Future focus includes climate and energy policy
Palmer looks for renewed focus on climate- and energy-related policies to affect a broad swath of industries. “Steps the new administration is taking toward carbon reduction may affect the auto and trucking industries, where equipment finance is heavily involved,” she says as an example. “This means we have an opportunity to help these companies gear up as they move toward making zero-emissions vehicles.” As for 2021, though, Palmer expects nascent recovery as the U.S. tries to return to a semblance of normalcy.
Virtual interactions shape future
If credit and collections employees weren’t already comfortable interacting virtually with customers, the pandemic forced the issue, Palmer says. “Suddenly we had to do it—and all of our due diligence—from our kitchen tables.”
Flexible working conditions were already in place at Key Equipment Finance when the virus hit, enabling most employees to work from home and hit the ground running. “Now we’re looking at what it will be like post-pandemic, and we already know that many of us won’t necessarily have to return to the office,” Palmer says.
With more employees working remotely, the industry will need to work through the challenges of mentoring junior works, she says. “In a virtual environment, how do you make sure they’re getting the experience and interaction they need?”
Banks integral to stimulus program
“Banks played a critical role in the COVID-19 stimulus program, and I don’t know that many people realize this,” adds Palmer. “Banks were in charge of getting that stimulus out to businesses, and the regulators worked well with us, promptly addressing issues banks had in providing the relief and being accountable.”