WLN Articles

Equipping Business for Success in 2012

In 2011, the Equipment Leasing and Finance Association (ELFA) had a very successful celebration of our 50^th anniversary, which culminated in a wonderful Annual Convention in San Antonio. In 2012, our members are excited about the opportunities that lie ahead, but they are also mindful of the numerous challenges we still face.

The Equipment Leasing and Finance Foundation (ELFF) reports that we finished 2010 with the industry sized at approximately $559 billion and projects that the industry grew to $628 billion by the end of 2011. We look forward to returning to 2006-07 levels by the end of 2012, with a projected industry size of $654 billion by the end of the year.

In my remarks at our Annual Convention, I highlighted ELFA’s six primary areas of focus for 2012. The six major challenges and opportunities that we see going forward are as follows:

1.      Lease Accounting

Our most important focus right now is directed toward the proposed changes to the lease accounting standard. We’ve had an incredible response from our members, their customers and a coalition of concerned organizations and individuals, who submitted over 800 comment letters in response to the last Exposure Draft from the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). As a result, the Boards have elected to apply many of our recommended changes and issue a new Exposure Draft in the first part of 2012. This re-exposure will give us an opportunity once again to provide input, and we look forward to mobilizing supporters to further represent our industry in this ongoing process.

The Foundation recently completed an economic impact study that highlights some of the shortcomings in the proposed changes to the lease accounting rules, not the least of which are front-end loading of expenses and complex and costly implementation procedures.  We hope the FASB and IASB will remain receptive to our industry’s input, and that by the end of 2012 we will have a change in the regulations that satisfies the need for transparency and also applies a degree of simplicity that will not have an adverse impact on U.S. businesses.

2.      Federal Government Regulations

After a very successful 2011 educating policymakers about our industry, we will apply even more focus on the regulatory process in 2012, especially as it pertains to Dodd-Frank. We will continue to provide input and comments on all of the proposed regulations with a focus on making sure our industry is properly treated and not adversely painted by the consumer brush.

In addition to the regulatory process, there is much debate on Capitol Hill over comprehensive tax reform, which will require our government affairs staff to remain closely attuned to the financial services and tax writing related committees as Congress addresses deficit reduction. The year 2012 is a major election year in the United States, and we will increase the level of effort and reach of our grassroots program. We look forward to sending our members not only to Capitol Hill but also to the regulatory agencies in May during our Capitol Connections program to ensure that our industry is recognized and appreciated.

3.      State Government Relations

At the state level, data security continues to occupy a significant portion of our activities. In an acceleration of current efforts, ELFA has strengthened data security advocacy in response to legislation making lease financing sources responsible for private information placed on equipment by customers. Last year saw the introduction of 14 bills compelling lessors to safeguard privacy information on any equipment that can copy, print or fax data.

Taxation of cloud computing has emerged as a significant state-level issue for 2012. ELFA is proactively engaged with a national task force of state legislators that will draft policy principles for taxation of the cloud. Leasing has been raised as one potential focus of this project.

4.      Research

One of the most critical elements in all of our advocacy and policy activities is appropriate communication with and education of policymakers. One of the most effective ways to highlight and define the benefits of equipment finance is through the ongoing research provided not only by ELFA but also by the Foundation. ELFA’s Monthly Leasing and Finance Index (MLFI) has become a key element in the financial press that is tracked and discussed and provides a level of credibility to our industry. The Foundation’s Monthly Confidence Index (MCI) is increasingly being recognized as a predictive indicator. The Foundation also has just commenced a quarterly economic outlook report for our industry, which will highlight the economic forecast for different industry sectors. In addition, our continued focus on communicating the benefits of leasing to the broader external audience will continue to be a major focus this year.

5.      Association Offerings

A trade association is only as good as the participation it garners from the employees of its member companies. Companies participate in an association because they can do things together that they can’t do by themselves. And, membership gives them access to unique business development, networking and educational opportunities. We were very successful in 2011 in responding to our members’ inputs and adjusting our programs and offerings relative to conferences, roundtables, educational programs and meetings. We will continuously explore ways to make improvements to serve the industry’s needs in 2012.

6.      Economic Turmoil

In today’s environment of economic uncertainty and turmoil in the global economies, we are fortunate to have three unique nonprofit organizations in support of our industry: ELFA, which manages our advocacy, our business and professional development and our industry information and statistics; the Foundation, which provides forward-looking research; and our political action committee, LeasePAC, which assists with access to and support of critical political agendas.

Our elected volunteer leadership is continually looking at ways to apply the resources of these three unique organizations to help the industry as it continues “Equipping Business for Success.”