Ognjen Radovic now reveals the key take aways from Tietoevry Banking's analysis of successful multi-country leasing solution implementations. This is part 2 of our leasing blog series.
This story is the second part of Ognjen Radovic’s article “How can you speed up the implementation of a multi-country solution for leasing companies?" published in the World Leasing Yearbook 2023.
Before going into the results, a summary of the various organizational structures is necessary.
The centralized company has a single legal entity based in one country extending its financing operations across multiple countries. This structure is typical for captives, who use a sales network and multiple repair and maintenance shops.
The decentralized company uses a separate legal entity responsible for financing in each country. This approach may have been chosen due to the potential tax benefits coming from lower transaction volumes, better understanding of the market and thus better sales and growth potential.
The hybrid company has a separate legal entity in each country but uses a Center of Excellence (CoE) for running parts of the leasing process from a centralized team. It means that one part of the company takes care of accounting, reporting, payments, credit decisions and many other supporting back-office activities for all countries. Part of the organization can be virtual and operate in different countries. The hybrid organization is typical when a decentralized company starts to grow and needs more structure.
Our data shows that a centralized organization is typically able to implement faster. Centralized organization accelerates implementation speed by greater decision power and less stakeholders, and thereby reduces the possibility for project failure. However, if business standardization is missing then the pace slows down. Business standardization refers to financial products, accounting, processes and ways of working.
On the contrary, the implementation in the decentralized organization usually takes longer due to more stakeholders and business variation across countries. The same applies to hybrid companies although the changes can be smoother with a Center of Excellence providing a level of standardization across the organization.
It is important to consider your own organization structure with its relative benefits and weaknesses as part of planning the implementation to reduce risks and maximize the likelihood of success.
It is important to consider your own organization structure with its relative benefits and weaknesses as part of planning the implementation to reduce risks and maximize the likelihood of success
It is good to keep in mind that regardless company structure, processes, financial model and such, a higher degree of business standardization always makes the implementation journey smoother and ensures faster integration of data sources across stakeholders and markets.
This also opens the use of more aggregated data leading to better strategic decision-making as well as optimization of day-to-day operations. The ability to gather, consolidate and analyze data from different stakeholders and markets is highly valuable for any company and frequently something that causes pain.
On the other hand, if a lease company gets this right, it has a relative advantage compared to competitors and might be one of the key enablers for a successful market entry, i.e., by being able to quickly analyze and optimize selected channels, products, prices, and terms.
The challenges faced by multinational leasing companies are multifaceted. By adopting the right multi-country solution and leveraging on local insight/expertise complemented by a structured and fitting implementation approach, the organization can maximize its chances of getting on the right track.
You can read the first part of the blog series here.
Part 1: These are the 7 key features of a multi-country leasing solution
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