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Allegiant is experienced in evaluating potential portfolio acquisitions for risk, ROE, cash flow, potential upside and revenue sharing. Stressed portfolios often include hidden problems that can materially affect cash flow and income. Portfolios may also offer substantial upside relating to residuals, security deposits, late fees, delinquent accounts and other revenue sources. Appropriate conversion costs, system requirements and staffing levels must be factored into the analysis. Negotiations should include a broad scope of factors. Discussions should not be limited to price, buyer’s rights and seller reps & warranties. At the same time, an efficient negotiating effort will be successful under tight time constraints if negotiators know what issues are material and seek to resolve obstacles in a creative way. Due diligence includes a verification of system information and accounting reports with the written contacts. Often there are clues in the contract files that may indicate future contract enforcement problems or dollar amount disputes. Employee interviews and forensics can help uncover fraud and determine fair asset values. Experienced lessors know what to look for. Servicing accounts with experienced personnel and the appropriate lease accounting system can make a big difference in performance and costs. The software should provide solid GL capabilities and be flexible enough to accommodate a wide variety of transaction types and reporting requirements. Data should be accurate and accessible. Ease of use, task automation, online capabilities and strong system support are essential for efficiency. User security must be robust and the software firm must be financially secure and reputable. Employees should be skilled at using the proposed lease accounting system. Conversions from one system to another need not be difficult and time consuming. Experienced accounting and system personnel are essential in making sure the portfolio is transferred quickly and accurately. Customer letters and invoices should be sent out in a manner that facilitates the transfer to a new payee. Good customer service can make a big difference in cash flow and income. Collections and customer service are essential parts of an efficient servicing effort. Timeliness and accuracy in billing and collections help improve cash flow and minimize costs. Collection efforts should be organized and assertive with guidelines pertaining to workouts and forbearance agreements. Insurance coverage should be kept up to date. Accounting functions are necessary to properly record interest income, gains on sale, expenses, depreciation, tax, off lease inventory, charge-offs and other entries. Considerable savings are realized if entries are done right the first time. Special depreciation opportunities may exist for lessees who inquire about them. Reporting should include all of the accounting functions mentioned above as well as cash receipts, income analysis, book gain or loss, delinquency aging reports, insurance expirations, UCC filings, static pool loss analysis, and various other indications of portfolio characteristics and revenue opportunities.
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