Adam Torres and Ed Hetherington discuss Ed’s career in the equipment financing and leasing industry.
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Show Notes:
What does it take to be successful in the equipment financing and leasing industry? In this episode, Adam Torres interviews Ed Hetherington, President at Hetherington Advisors, LLC., explore the equipment and leasing industry along with the upcoming book Ed will be launching with Mission Matters.
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About Ed Hetherington
Ed Hetherington is the President of Hetherington Advisors, LLC, an Atlanta-based consultancy specializing in execution, innovation, and technology solutions for equipment financing and leasing companies. With over 50 years of experience in the equipment financing industry, Ed has held significant roles, including 20 years as President and Senior Advisor of Doosan Financial Solutions.
PRNEWSWIRE.COM
Throughout his career, Ed has been involved in various aspects of the equipment leasing and financing industry. The first 30 years were spent as both a third-party lender and a lending partner to manufacturers and franchisors. In the subsequent 20 years, he led a successful captive global finance company for a leading equipment manufacturer, financing billions of dollars annually through diverse financial products across over 40 countries.
Full Unedited Transcript
Hey, I’d like to welcome you to another episode of Mission Matters. My name is Adam Torres, and if you’d like to apply to be a guest on the show, just head on over to missionmatters. com and click on be our guest to apply. All right. So today I have Ed Hetherington on the line and he is president over at Hetherington Advisors LLC.
And he’s also, I’m proud to announce an upcoming author in our upcoming book that’s going to be released later this We’ve been working on this book for a long time. Just a quick side note here, or not to spoiler it. We’re not going to get too far into the book today, and that’s intentional because we’re going to, well, number one, we want to sell books.
The book’s not out and it’s not live. So we definitely want you to pick up a copy, but we will be bringing Ed back onto the show once the book is out and live so that, so that you can obviously pick up a copy and then we’re going to do a deep dive into the book as well. But first off, Hey, Ed, welcome to the show.
Good to finally get you on. Yeah, good to be here. Appreciate the opportunity to talk to you. So again, great to finally have you on and we got, we got a lot to talk about today. So as I mentioned, we’re not going to go too far into the book, but I’m just thrilled to talk about what we’ve been doing in the industry and my, my learning curve and the things you’ve been teaching me.
And even when I was a Fly on the wall at the AED conference with yourself and with the guys over at Vanguard captive management Brad and the rest of the team over there learning about the industry and definitely in the learner’s seat about what makes the, this industry move, what makes it tick, which you’ve been part of for a very long time.
So we’re going to get into that and more, but to get this kicked off, Ed, we’ll start this episode with what we like to call our mission matters minute. So, Ed, at Mission Matters, one of our aims and our goals is to amplify stories for entrepreneurs, for executives, for experts, for people, and also for industries to shed light on industries that we feel need to be heard and there needs to be more awareness built around.
So that’s our mission and our goal. Ed, what mission matters to you? Well, you know, I’m I’ve been in the industry about 51 years now, and it’s been very good to me. It’s somewhat of an industry that is not as heard of in a lot of a lot of areas. So, you know, I think this is a good opportunity to expand the overall knowledge of the industry.
Yeah, it’s only becoming popular to do podcasts. So within the industry. So I look forward to, you know, getting more out about, equipment leasing and financing and then talk a little bit about. What Brad and team is doing at Vanguard and what I’m involved on as, as a consultant to them. Well, great to have you on.
And I guess just to get us started, let’s go back. As you mentioned, you’ve been into in the industry for quite a few decades. Let’s go back to the early years. Like, like, how did you first get into this? Like, where’d that begin for you? Yeah, I mean, I was working part time for a major car manufacturer, collecting car accounts and repossessing cars and some of the Interesting areas of New York City back in the late 60s, early 70s.
So, oh man, it lived to tell about it. Go ahead. Well, you know, when you’re young, it’s more of an exciting thing then, you know, you don’t see the danger in it, but It was interesting. And so I applied for a job after that as, as a collective for the equipment leasing company. And not really knowing what that meant.
You know, somebody asked me, you know, what equipment are you talking about? I said, you know, I don’t know, you know, so but it turned out to be a general equipment leasing company. But I was originally involved with a lot of photocopy of business and collecting those accounts. But then, you know, you know, during the many decades later, you know, you know, I did a little bit of everything in the industry and that was what I think one of the good things, you know, back in the early 70s where.
You didn’t have all this technology and so everybody had to do a little bit of everything. Yeah, and so, you know, you learned about credit, you learned about operations, you learned about documentation, you know, so there wasn’t an aspect that you didn’t really touch. Yeah, and, you know, you really start at the bottom and the opportunity to take your.
Career in different directions, whether it be more of a sales marketing role or more of an operation role or more of a credit role. And so I dabbled a little bit of everything, but then decided, you know, to take a sales opportunity and you know, after many years of doing that, got into sales management.
And the last 20 years I was involved with what we call a captive finance company. We set up a captive finance company in 2002 for a major construction equipment manufacturer and operated that for about 20 years as president. We were in many countries it was a global operation and we pretty much did everything that.
Captive needed to do to help their manufacturer support their dealers and the manufacturer in terms of financing. So we did floor plan financing, retail financing, consumer, commercial supply financing, receivable financing. So it got to be a pretty well inclusive job. I want to, I will definitely get back to the finance side and what you did with captives and a little bit further into that.
But I want to stay in the early days a little bit longer here. So you you’re in this sales role and this, and you’re, you’re leaping out and you’re expanding your skillset at what point, or was there a point, maybe it was a progression. Did you know, like this would be an industry that, you know, you, you may build a life in and that you’d be long term in a business and you felt it was some place that you fit in, like.
How did that when, when did that occur to you? Yeah, I, I think it was earlier than that, you know, when I was a collector, you know, like, I kind of got interested in the equipment, you know, and all the different things that the company was financing, you know, so back then that original company we did, as I said, photocopies, but we also are big in, in transportation owner, operator financing.
Trucks and trailers construction equipment, so there was a lot of diversity and, you know, you got to learn about all these businesses and you know, and I think it was early on that, you know, I decided that this might work for me. So, actually looked at ways of you know, showing differentiating myself from others, you know, so I think I made the decision probably within the 1st year or 2.
Wow. That, you know, this might be something I can pursue. and that I would enjoy. Amazing. Try to always work in like one pay it forward question, Ed, for the, for the next generation that are, that are watching this as well. So if you were maybe yourself looking back, or even if you’re just speaking to the next generation and they’re thinking about entering this as a, as a field or as a profession, whether they’re starting from the, from the bottom, as you, as you mentioned, to use your words.
Or otherwise, like, like, what kind of advice would you give someone? I know it’s not in vogue today to start at the bottom, but that’s what I want to hear. Come on, give us what you’d say, but I would say, you know, I would admit that you can’t start at the bottom today. It’s not practical, but. So I would define it by saying, understand what your business is really about.
So at our core, our business is about credit, the establishing a credit. So, and how do you do that you know, with analyzing risk. And being able to take risk. So that’s at core of what we do. So, you know, anybody getting into this industry should spend some time either in the credit department or, you know, taking some of the industry courses on credit.
Yeah, like, even as a salesman, you know, I think a lot of my success was the fact that early on, you know, I understood credit and so, you know, I did believe there were good deals and there were bad deals and, you know, I understand the fact that some deals don’t work out, obviously. You know, I repossess cars, so that’s the ultimate of a deal not working out, you know, so black and white.
Yeah. So my, my thing would be, you know, there’s not many companies that really have this start at the bottom type of thing and move you into all different things anymore. But you know, and no matter what you do understand what you really do, what is the core product and product is loaning money and you loan money by understanding credit.
So, no matter what part of leasing you want to get into. You should have at least that general understanding of credit. And so you found your niche. It sounds like after you had the opportunity to go to, you know, a lot to do a lot of different things, right? Like your boots on the ground, then at some point you transition to sales.
Then at some point you’re going. further into now creating programs as well. Mates, let’s kind of transition into that part of the conversation. You mentioned that at some point you go and then you start creating these captive programs. Maybe start with just a broad definition of what that means. Well, most people aren’t really deal with captors and have seen it and been part of their lives because you know, most of the major car manufacturers had what you call captive finance companies.
So that would be a GMAC is your Ford motor credit. So, you know, some people might not have realized that they’ve dealt with a captive, but they really have and you know, so all we did is take that that premise of. What the car manufacturers are doing and related to the equipment leasing industry and, you know, at its, at its simplest point, it’s really selling payment and not price.
So, if you look, you know, I was going to say, this is dating myself a little bit, but if you, if you remember the old Sunday newspapers, there was pages and pages and pages of car. Advertising, which would say, you know, depending on what year it was 119 a month for this car. You know, nowadays it’s. You know, 799 a month for this car, right?
Yeah, but that’s, that’s the, that’s the way it was sold. You know, they didn’t really leave with price. And you know, so setting up captive programs would allow a manufacturer or it didn’t have to be a manufacturer in those days. It could be a dealership, but allow them to understand or have their salesmen understand how to sell payment, not price, how to lead with payment.
And not lead with the price and, and, and have programs that were consistent to the market, you know, so in some industries where there’s some, let’s say seasonality, yeah, we have the ability to have no payments during the slow season or, or smaller payments. So structuring the repayment programs around the needs and the cash flows of the business unit.
You know, is a big thing. And so working, working with the manufacturer and coming up with these programs that are consistent, that are needed by the industry that they’re in, you know, is a big influence there. And it comes through a design to buy a particular product. Yeah. And, and I just want to make sure that that I’m, that I’m painting the right picture here.
So using the Ford example to just elaborate it on a little bit and make sure that I understand it correctly. So let’s say, you know, Ford, you’re going to buy a car and you’re buying, you’re buying it off of the price there. It says, you know, it’s 299 a month, 300 a month, whatever the amount is. When you go through Ford Credit, that actual Ford Credit, that’s a, that’s a captive, right?
That’s something that Ford is funding, and there could be other, obviously there’s other pipes in the back, but like Ford, that’s a program that is funding, so if you go to, I don’t know, Lexus, or somewhere else, or Toyota, They have their own separate captive program there. So that are doing their own financing.
They have their own design, their own program. So all of these different auto manufacturers have, or have, can have their own captives and that’s, what’s allowed them to keep the prices maybe to where they can move more inventory. Maybe they can do different things, but it gives them flexibility for whatever they need to design or customize.
for their customer base. Am I accurate on that? Or am I often? Yeah, you know, you’re absolutely accurate on. It’s the manufacturers setting up these captives that they have the ability to set programs that they think fit their product and their customer base. Now they also deal with, you know, third party banks, you know, Prime and subprime credit and things of that nature.
Yeah. But you know, the captives are the, the ones that really, you know, drive the, drive the engine. Yeah. Where do you see that the most? Well, you see it at, you know, what you call the 0% programs. Oh yeah. You know, so you see that every manufacturer in, you know, whether it be in the car industry or even in our industry, the equipment industry.
Have what we call subsidized rates. So, you know, you have the rate that is appropriate you know, at this time in the economy and, but then you have the rate that the manufacturer’s programs would give to the end user. And so what happens there is the manufacturer has to buy down that rate. So the lender or the capital finance company still makes the normal yield that they need.
But the manufacturer, you know, pays the difference to get them to that yield while providing the end user with the lower, lower interest rate. And sometimes, and many times this is low as 0%. So applying this concept to equipment, leasing and finance. It would seem as though whatever that piece of equipment is, whatever that piece of heavy equipment is or otherwise, it would seem that when a dealership or a dealer, which I had the privilege of, as I mentioned before, going to the AED conference or summit with yourself and Brad and some of the other team over in Orlando, which was amazing.
And when I was there, I got to speak to different dealers and other individuals. And some of these. These dealers, you know, it’s second, third generation businesses, which was amazing to like to see all the community together like that. But just to kind of apply that concept of captives to that.
So it would seem like, and correct me if I’m off on this, when the dealer decides to set up their own program like that, it can give them maybe some potential benefit in the market to serve their clients better, their clients being whomever wants to lease from them. Am I off on that? Or can you kind of just.
Make that connection to the equipment like side of things for me. No, it’s correct. Except that I would say typically it’s not, the dealer is using programs set up by the manufacturer. Those programs all set up with influence from the dealers or what they need or what their competitors have or what their competitors don’t have and you want to differentiate yourself, but then the manufacturer gets involved.
And then the manufacturer typically works you know, With their own funds or they set up what we’re trying to set up with Vanguard is, is what we call virtual captives, but you know, so it’s really, it flows down from the manufacturer to the dealer to the end user customer with input from everybody and what is really needed.
So, like I said, you know, you have, you have 0 percent programs, then you have you know, maybe 90 day defer program where you don’t have a payment for the first 90 days. Well, you have that equipment and what that does allows a company that’s buying that equipment. It allows them the time to actually go out, build a product with that equipment.
Right? Yeah, build that product to a company and have time to collect that money before their 1st payment is due. So it’s really, you know, in simplest form from the get go with that type of program. The equipment is paying for itself day one. And so, you know, for cash flow and otherwise, I mean, who doesn’t want that?
Right? Right. And especially for, you know, smaller, you know, middle market, but absolutely, you know, this is this is key. And then, you know, with a captive finance company, you have a little bit different way of looking at credit and, you know, that’s important. Also, you know, because. You know, a lot of the businesses and, you know, smaller businesses don’t do financial statements that are audited and have all the hierarchy of of accounting as a major corporation.
So CAPTIV understands their customer base. Yeah, and and can look at it a little bit differently than somebody well, even a bank who will more listen to regular credit rules. Yep, and within a captive in the equipment leasing business on the equipment side, the collateral is a very important piece because, you know, that collateral will always have some value.
Would it be accurate or inaccurate to say that, you know, with a, with a more competitive plan, maybe you’re moving more inventory and more people are, are, you know, are shopping with you, but that’d be an accurate statement or. No, it’s absolutely accurate. You know, with I have the saying that selling equipment is hard, but buying equipment is also hard.
Right? Yeah. So this is where these 2 sentences intersect with each other. Right? Yeah. So it’s a, you have a seller who, you know, is trying to sell equipment and. He’s trying to convince that by that his equipment is the right equipment for them at the right price and, and we’ll do the job that they can make money.
On the other hand, that by equipment is trying to say, do I have the right piece of equipment? Yeah. Will it make me enough money to make a sufficient return? It’s almost the same questions, but a little bit differently. Of course. So the financing very easily brings in his a payment is what’s going to cost you every month.
Hmm. Or break it down. You could break down the payment to weekly and you know, and hourly. Mm-hmm . So a very small businessman can quickly understand if this is affordable for them. Yeah. So having that all, you know, it’s kinda a little bit like solution selling in a way. Mm-hmm . You know, it’s not saying here’s my machine.
It’s, you know, 300, 000 thing. Here’s my machine. Here’s the payment. And then here’s what we expect you to make, you know, from this machine. And here’s the affordability of it, you know, because our payment is as 0 percent or or no payments for 90 days and let’s let your cash flow catch up to your debt requirements.
So what would be the reason or, and I’m sure this is going to vary, right? From situation to situation, size of company, just a lot, a lot of different things, but I’m, I’m curious to hear some of the reasons why you’ve seen, maybe some companies haven’t explored the captive space or creating a captive.
Cause to me, it seems like, and again, I’m not, I obviously don’t own a dealership or, and I don’t sell equipment, but to me, it seems like at the, at the highest level, you know, if the auto companies like. something else have kind of proven this model for a really long time. Others are benefiting from it. If I, you know, was in that business, it seems like that would be kind of something that would make sense.
I want to be more competitive in my market. I want to move more equipment. I want to, you know, treat, have, have more options for my customers. Like why, why wouldn’t somebody kind of explore this? No, there’s not a good reason not to do it, to be perfectly honest with you. You know, most people are selling equipment, you know, have some sort of, Financing idea for their business.
Now, some of it is more reactive. So a customer comes in and, you know, gets excited about the piece of equipment and then says the, the words that the dealer doesn’t really want to react. Well, can you finance this for me? So now they got to react, you know, and typically, you 10 companies local that they can send the deals to and see if they can get financed.
That’s very reactive type of financing. It’s not part of a plan. And then, you know, you pass that customer on to somebody, which is, and see what happens and see what happens. And so that’s, so that’s, that’s not ideal in my opinion. And then you get into, okay, let’s not be reactive. Let’s be proactive. Yeah.
So, you know, so some local dealers will set up their own little programs. But then if you’re dealing with, you know, manufacturers size. Yeah, they kind of come in and say, well, let’s let’s all work together. And set up something. So, you know, as I said earlier, lead with payment and not price. So very, very, very early in the situation, you will say, you know, here’s the payment and we can finances for you.
I mean, you have credit and then you look today, you know, you have financing alternatives right on websites. So, like most of the major manufacturers, if you go to their website, they’ll have pictures of their machines and of course, but then there’ll also be a button if you want financing, you know, click here and then you can go in and find out what your payments might be.
There might be an application there. So finding thing is kind of the key thing that puts that all together and allows for, you know, 1 stop shopping. Yeah, I like going back to the auto example you gave because it’s very, it’s just so clear to me the way it just makes sense. So could you imagine Ed, like if you went to Ford and all of a sudden Ford’s like, Oh, you know, you need financing and they’re like, okay, let me send you to all these.
Third parties and see if they can figure it out and then come back and get your car after like, let that sink in for a minute. Like, what would that be like? So, but that’s what you’re describing partially. Like, I’m being a little bit because, you know, mostly, as I said, the car dealer usually has what they call an F and I person that handles a lot of this.
And so they had the opportunity to deal with the captive or with the subprime lender or bank, you know, so. But they control it and they, yeah, but it’s all in house. They’re doing that right there. They’re not saying, let me, let me pass this lead along. And if it, if they can get you taken care of, we’re going to, so there’s a plan.
The whole point is a plan. It’s the whole point is a plan and it’s a thought out plan. And, you know, as I said, you know, using subsidy, you know, subsidies can get the guy in the door. Mhm. You know, a lot of times somebody sees an ad that you’re running, you know, you’re running 0%. That’s going to sound interesting to a lot of people.
And so that gets them in the door now, whether or not they close on that. That’s another matter. And it’s irrelevant. It gets, it gets you as the dealer or the manufacturer up to bat. Yeah. And that’s what you really want to be. You want the opportunity to get up to bat. I do want to spend a little bit of the time we have here talking a little bit more, but I know you’ve been consulting for Vanguard captive management, maybe talking a little bit about the vision and that project overall.
Yeah. So, you know, I, I know Brad a number of years now, we did some business together in my prior life. And when I retired You know, he said, Well, there might be some ways we can work together. And so the initial approach was very much, you know, like a lot of programs that are out there, you know, setting up working with manufacturers or large dealers and.
And setting up virtual captives and things of that nature. But, you know, we soon realized, you know, that’s kind of been there, done that. And there are a lot of, a lot of companies doing that. So how do we make this a little different? And so we decided, why don’t we just try to outsource the whole virtual captive for a manufacturer?
So if you’re a manufacturer and you really. You know, don’t want to be in the finance business, but, you know, you need to be in the finance business. So, you know, our program will allow you to get all the benefits of having a captive without a lot of the expense of commitment and resources, credit risk and things of that nature.
So where Vanguard comes in is that we not only set up these programs. For manufacturer, you know, we work with lenders and set a very formal program agreements with the lenders have what we call key performance indicators and then Vanguard continues to manage the day to day function. Active. So a manufacturer really doesn’t have to dedicate, you know, very little, if any headcount to the day to day operation.
Now they will need to, you know, have somebody on staff. That’s going to be our key point person. And that will attend meetings with, you know, lenders and. And customers when needed, but for the most part Vanguard’s offering a complete outsourcing of a captive finance, a virtual captive financing, so that’s very new and different.
And that’s how we differentiate ourselves. And that makes it, I just want to make sure I caught this correct. So you’re, so now you’re doing all the heavy lifting so that the dealer can, or the, they can focus on what they do day to day. And they don’t have to be like dedicated into the finance business, but they still get, they still get the benefits.
Exactly right. So then you know, we are setting up, you know, based on our experiences and, you know, and you know, we have many years, you know, I have. 51 and Brad is 30 and, you know, so we have a lot of experience within the company, you know, so we can set up the programs. That are needed for that particular industry, that piece of equipment, you know, what is the, what are the things needed best to finance that equipment, understanding the credit profiles, going back to my earlier statement, we’re in the credit business.
So the 1st thing you need to really understand and and then come up with programs that help increase sales or gain incremental revenue, gain information. And actually help the, you know, two things really is getting new business, but also using the program to retain existing customers.
So market share is usually a pretty big thing. Right. And yeah, market share, you have to do two things, right? You need to get new customers, right? But you have to keep your old customers because market share, if you lose old customers. And you get new, you’re just playing, you know, you’re just playing catch up.
Right. So, you know, financing will also help captive financing, especially it will also help you retain customers. Yeah, and, and looking at the retention side of things, it would seem, it would seem that if, let’s just say they, they came into and, and there’s a program that met their needs and it was easy for them to get through and whatever it was, whichever one that specifically matter, whether it was the no payments and for 90 days or whatever it was, it would seem like they would.
Not even think about and in some cases shopping around, they’re like, okay, let me go back to my guy. Let me go back to my deal. Let me go back to because of the experience that was there versus maybe some other experience they had in the past. It seems like that would be like a no brainer. Almost. Yeah, no, because you have credit established.
So, you know, you as an end user, have your credit established with that captive and that captive knows something about you. The best reference a finance company can have is their own reference. So it’s not like you paid somebody else as agreed that you actually paid me as agreed. So that’s, that’s very important.
So you have your own reference. So you know, so there are things you can do working with existing customers that you, because you have information you can do that, you know, if you didn’t have that information and off the customer better deals than, you know, normal. Amazing. Well, Ed, this has been a lot of fun getting you on the show and now I have a better understanding as well of not just the industry, but also captains.
I hope my audience does as well. That being said, we’re, we’re, we’re live today. It’s what, February 4th, 2025 years, just kind of getting going. What’s next for you? Like, like what’s next for 2025 for Ed? Well, you know, we have a lot of work to do in rolling out this program for Vanguard, you know, and I do have other clients and You know, so a little bit more of the same, but, you know, I am semi retired.
So trying to mix a little bit and you don’t seem semi retired to me. I was with you at that ad summit and you had a log, a lot of steps. Well, that caught up with me later in the week. I think a little bit. So, you know, kind of blending retirement with, you know, still doing, you know, keeping my, my brain in, in, into the financing.
Fantastic. And if somebody’s listening or watching this, and if they want to learn more about either Vanguard or about Heather, Heatherington advisors, how do they do that? You know, I have a website, Heather, Jen advises LLC, you know, just go on, you know, and there’s something about me and has my phone and everything to contact me.
Awesome. And for Vanguard, it’s a van cap. com. If anybody wants to check that out as well. And speaking of the audience, if this is your first time with mission matters and you haven’t done it yet, hit the subscribe or follow button. This is a daily show each and every day. We’re bringing you new content, new ideas, new stories, and hopefully new inspiration to help you along the way in your journey as well.
So again, hit that subscribe or follow button and Ed, man, I’m, I’m excited for this book. We it’s almost we got maybe another week or two. It’s cool. We’ll have you back on the show. Finally, the end of this journey of, of creating this book, I should say the beginning, right, of promoting and getting it out there, but a man, appreciate all you doing.
Thank you for coming on the show. Look forward. Thanks for having me.