Michael Levinson explores how recent technological advances including license plate recognition (LPR) and remote inspection tools are enabling lenders to recover and liquidate assets in record time.
Fast, effective recovery and remarketing of equipment tied to defaulted loans can make a huge difference in the net recovery on those loans. Fortunately, recent advances in recovery technology, valuation methodologies and remarketing through digital platforms are allowing lenders to recover and liquidate assets in record time and, in many cases, at record prices. Let’s take a look at each of the key components of the process more closely.
In recent years, there has been a sharp increase in the data that is available to assist in finding missing borrowers and equipment. The sources range from very current databases reflecting new information on borrowers, business locations, known associates, etc. Also, for vehicles, the use of License Plate Recognition (LPR) technology has become an extremely powerful tool in the recovery process. This technology provides real time location on over 200 million license plate scans every month! There are only a few national repossession companies that utilize this technology for commercial assets, but they do exist.
Equipment Inspection & Valuation
In the past, one of the challenges that lenders often had was getting a high-quality inspection done on recovered equipment quickly and efficiently. Historically, this process involved dispatching trained personnel to repo lot locations for an on-site inspection. This often resulted in weeks of delay before a proper value could be established and the equipment listed for sale. With high value equipment, this delay often translated to lower values and net recoveries.
However, due to COVID-19 pandemic, there has been huge progress made conducting high quality equipment inspections remotely. These inspections, which combine high quality photos, video, sound and artificial intelligence can now take place within a few hours of the recovery of the equipment and are often guided by a highly trained technician familiar with the equipment involved.
“There used to be a negative correlation between speed and quality,” says Cort Brady, CEO of Aspen Field Services. “If you wanted a high-quality inspection, you had to wait weeks. If you wanted a fast one, then you got poor quality. Being able to combine both of those is a one-two punch that’s really unparalleled for any lender that’s trying to sell their equipment.”
Expanded Remarketing Options
In addition to the delays in remarketing mentioned above, there are other challenges with the traditional approach. With many types of equipment, the remarketing process is still dominated by the auction channel. This channel often combines the undesirable characteristics of higher costs resulting from the need to transport the equipment to the auction (often long distances) and lower sales prices inherent in the auction process.
Due to the emergence of effective digital marketing channels and strategies, today it is possible to deploy a hybrid approach that can drive faster sales, higher values and lower costs. Combining the right use of technology with these digital channels allows lenders to offer equipment through retail, wholesale and auction channels in a sequence that will optimize the value. Furthermore, all of this can be initiated within hours of recovery.
While all of these emerging capabilities have created new opportunities for lenders/lessors looking to liquidate equipment, even greater opportunities are likely as advance uses of artificial intelligence in the industry evolve. Stay tuned.