Q&A: TCF Inventory Finance on the market, financing and 2013
TCF Inventory Finance recently marked its fifth year in business. Those five years have seen plenty of change in the financial markets and the boating industry.
CEO Ross Perrelli and Peter Kelley, president of TCF Canada, shared their thoughts on where we’ve been and where we’re going in an email interview with Boating Industry.
TCF Inventory Finance came into the market at a time when many other lenders were leaving. What makes the marine industry an attractive one for TCF?
Without a doubt, the financial markets and the industries we serve – including the marine industry – were in a serious tailspin when we opened our doors five years ago. However, we have a very strong team with many decades of experience in the marine industry and we knew that at the first sign of recovery consumers would return to their passion for pleasure boating like they always have in the past. The recession absolutely took its toll and, unfortunately, many retailers and manufacturers did not make it through. However, we continue to see the survivors emerging from the economic devastation and doing what they can to continue to survive and grow. Simply put, our goal is to support their efforts to succeed.
Based on what you’re seeing from your clients, what’s your outlook for boat sales in 2013?
What we’re seeing at long last is much more optimism at the dealer level, stronger sales at pre-season boat shows and a general upbeat outlook from all of the industry people that we talk to. However, among our customers, a shift in consumer appetite is apparent as we see a much stronger rebound in aluminum, pontoon and outboard-powered boats than in the more traditional fiberglass inboard product.
What’s the biggest lesson lenders learned from the recession?
As a retailer, if you run your business well – manage your inventories, manage your cash and look after your customers – you can survive just about any downturn that the market can deliver. As a lender, we need to stay focused on the basic elements of the businesses we support to make sure they are operated in a prudent and responsible manner.
What do dealers need to know about what has changed in the wake of the recession?
Expect a stronger focus on inventory. We expect that curtailment payments, prompt remittances after the consumer sale and inventory aging will be big areas of focus for all inventory lenders in the future.
What are you looking for when deciding whether or not to extend inventory financing to someone?
Well-managed businesses with a good track record and a healthy focus on the issues highlighted above.
What are some common mistakes dealers make when trying to obtain financing?
Applicants need to display a real grasp of the critical elements of their business. What succeeds? What doesn’t? Strong communication skills around issues such as results, strategies, forecasts, etc., will differentiate successful applicants from those who struggle to obtain financing.
What factors should dealers consider when choosing a financing partner?
Dealers should choose to work with an inventory finance provider that delivers a high level of service, takes the time to understand the dealer’s business and the industries that they serve and can be counted on to provide value in the relationship that extends beyond the straight floorplan finance product.
What makes you optimistic about the marine industry?
We’ve seen many times throughout other recessions and industry downturns that as soon as the consumer sentiment improves even marginally there is something that quickly drives enthusiasts back to boating. Boating is a family-oriented pastime that delivers great pleasure and an escape from the stresses of everyday life. We remain very optimistic that at the earliest uptick in the economy those consumers that have been holding off on boat purchases or upgrades will return with a strong desire to make those moves and spend more time on the water.