Editor’s Note: All source interviews were conducted prior to the April 2 tariff announcements and subsequent market changes.
One word comes up every time you speak to industry leaders in recent months: “uncertainty.” Tariffs, regulatory upheaval and inflation’s persistent grip have created a landscape where even experts are hesitant to forecast outcomes.
Examples of this uncertainty are as varied as the people and companies who are thinking about it.
“We’re remaining vigilant as a number of macro and micro economic variables come into play,” says Rob Vickery, Senior Vice President, Regional Credit Officer, Huntington Bank. “We’re continuing to watch the impact of tariffs and economic sentiment closely,” he says.
As a result, prudent management has become a priority with many customers, Vickery says. “They’re looking at their balance sheets, capital structure, liquidity and other risk factors as they consider making capital expenditures.”
“The challenge of the moment is just the economic outlook,” says Michael (Mic) Mount, Senior Vice President, Credit Executive, U.S. Bank Equipment Finance. “There’s been volatility and heightened economic and policy uncertainty.”
“It’s definitely dynamic right now,” says Jim Tobin, Director, Retail Credit, Volvo Financial Services. “The first quarter is off to an interesting start, and a lot of folks may be in a wait-and-see mode.”
Some of this uncertainty has lenders choosing to engage third-party providers to take on tasks that might require additional staffing.
“We’re seeing an increased flow of business month over month,” says Ian Campbell, Senior Vice President of Operations with Asset Compliant Solutions, which helps lenders with early to late-stage collections and asset recovery services. “It tells me that there’s still some strain on the market and credit environment. Everybody needs to understand what they’re seeing.”
Even in this uncertainty, however, some market realities haven’t changed.
“It’s still very, very competitive,” says Christine Holguin, Executive Vice President, Head of Credit, CCA Financial. “We’re seeing a continual string of privately funded or private equity-backed entrants into the market. There’s a lot of capital right now and equipment finance is a good place to put it.”
Holguin has also seen a shift away from rate sensitivity. “It’s now about getting the best-structured deal. We’re being asked to be more creative with things such as transaction size, hold levels, how fast you can get an approval, whether they can go a few months without a payment, etc.”
Credit tightening?
Campbell has seen lenders tighten their credit window in the past year. “They’ve made decisions not to lend to newer businesses,” Campbell says, “and are focusing on having a healthy portfolio.”
While some industries saw increased delinquencies last year, Mount notes that the trend has stabilized. “Financial performance has also stabilized, but we don’t have a line of sight yet on the impacts related to tariffs, trade and immigration policies,” he says.
“On our end, delinquencies have stayed relatively flat,” Vickery says, “which is a function of our strong credit culture.”
Lenders understand the dynamics of what’s happening, Campbell notes. “They’re being cautious and adjusting expectations of what is the right liquidation of their portfolio based on performance and delinquencies,” he says.
Holguin notes that some companies are choosing to close their doors instead of filing for bankruptcy. “Even if they’ve never had a late payment and have cash on the balance sheet, they’re choosing to close,” she says. “If a client gets to that point, my hope is that they’ll reach out to us so that we can work with them to find a solution.”
Market watch list
Ask which markets are still lagging and the easy answer is transportation—as it has been for the past two years.
Signs of improvement are on the horizon, however, it’s worth noting. “In the past 90 days, we’ve started to see more lenders placing big fleet deals with us for recovery of their assets,” Campbell says.
“Certain trucking customers did well in Q4, and it offset some of the earlier part of the year,” Tobin says. Spot rates, the on-demand price a carrier charges to move freight, continue to be monitored closely. “With spot rates, pennies count and when the rates continuously go down, only certain size fleets can shed those pennies,” Tobin notes.
Smaller manufacturing and wholesale businesses also bear watching, especially as tariffs loom. “These companies don’t have the capital base necessary to sustain a long period of softness in their business,” Mount says.
Construction is also experiencing some hesitation, Tobin says: “Construction purchases are usually tied to a job, and we’re seeing some contractors ask for modifications even though they still have plenty of work. It’s something we’re watching.”
Other market sectors are thriving. “The data center spend is quite large,” Vickery says, “which reflects what’s going on in AI. Cybersecurity is also a consistent spend.”
Food, beverage and egg manufacturing may also be due for increased capital expenditures, according to Holguin. “We have a lot of food plants with old equipment,” she says.
Pause on sustainability?
Has investing in green equipment been put on pause with the new administration’s lack of enthusiasm on EV subsidies and incentives?
“We’ve been looking at some of the green energy areas for a while, but right now it’s hard to know where those are going,” Mount says. “I think the opportunity is still going to exist, I’m just not sure in the immediate future if it will be as large of an opportunity as some of us were expecting.”
And because of EVs' higher up-front costs over diesel or gas powered equipment, many EV deals were supported by government funding. “Removing those financial incentives while facing uncertain resale valuations introduces additional risk factors,” Tobin says. “Still, many clients remain committed to electrification, and it continues to have numerous practical applications.”
Automation and AI
Campbell warns that companies failing to integrate AI automation into existing technical systems risk falling behind competitors. “Your only other option is to throw brute force at it through hiring, which is not scalable in today’s environment,” he says. “While some are worried about AI replacing jobs, I think it’s just helping us keep up with the capacity we need.”
ACS, for example, is using automation to do more administrative work, “so our skilled employees can focus on the more technical pieces of the job that need a human touch,” Campbell says. “It will also generate cost savings while increasing our resolution and recovery rates, generating revenue for all parties.”
“We’re looking at opportunities where we can use AI from an efficiency perspective without increasing risk,” Mount says. “Our focus, however, is conducting our thorough underwriting work to fully understand the customer’s circumstances and the opportunity.”
“Even if you have an AI tool giving you all the key financial ratios, if you don’t have someone who knows what those ratios mean for that particular customer segment to interpret the AI results, it could create problems,” Tobin says.
Holguin emphasizes her commitment to maintaining human oversight, though she does see AI providing a valuable assist in combating fraud. “Fraudsters are not just chasing after one entity,” she adds. “They’re going after everyone.”
Combatting fraud
Which is why the upcoming Credit & Collections Conference (see sidebar) will showcase a popular session, “Fraud: Tools, Tricks and Technology to Defend Against Fraud.”
“It’s like everything old is new again,” Holguin says. “Fraudsters are taking checks out of mailboxes, redirecting payments, requesting overnight check payments versus electronic payments. Smaller, private companies are getting hit.”
In another example, a con artist took on the identity of a recently deceased person, and working strictly online, financed and acquired a machine, which promptly disappeared.
“Which of the many red flags might best help safeguard against these tactics?” Tobin asks. “I’m looking forward to hearing the insights our panel of experts will share on this topic.”
What’s ahead
“We’re going to be incredibly busy,” Holguin says. “I expect there to be a lot of demand this year and the potential for a favorable tax environment is going to drive investment.”
Trying to navigate the present economy with its unknowns is the biggest challenge, Campbell says. Will we fall into a recession, and if so, will it be a soft landing?
“It’s going to be important for lenders to have strategic partnerships with agencies like ours to drive key performance and reduce overall staffing costs,” Campbell says.
“We’re watching the level of capital investment and how businesses are reacting to the evolving economic landscape,” Vickery says. “Companies may be thinking a bit more before they acquire new assets. But I think it’s going to come back quickly, perhaps in the second half of the year.”
“We’re in a good place,” Mount agrees. “Portfolios overall are performing well, and customers have gotten accustomed to the higher interest rate environment. As we look to grow our portfolios, we are taking a balanced approach to the opportunities and risks out there and remain optimistic.”
2025 Credit & Collections Management Conference & Exhibition
Rob Vickery emphasizes the value of the Credit & Collections Management Conference for both networking and market intelligence. “It helps ensure you’re seeing the complete picture,” he says.
Ian Campbell seconds Vickery’s assessment. “We want to make sure we’re aligned with what everyone else is seeing in the marketplace,” he says. “I look forward to some great conversations.”
This year’s conference is scheduled for June 9-11 at The Westin Tampa Waterside, Tampa, Florida. The conference will be a hybrid event, with the option to attend online.
Conference favorites such as “How Would You Do the Deal?” are making a return appearance. Organized in roundtables, participants look at case studies on several small, middle, and large ticket equipment finance transactions. “Participants come up with a theoretical approval or decline,” Christine Holguin explains. “We then talk through what really happened and the outcome. It’s always a great session.”
“Attend as many of the sessions as you can,” advises Jim Tobin. “I’m a credit guy but I listen to the Collections Effectiveness Survey results. It gives me insight into what I should be looking for on the credit side.”
Along with the collections survey, results of the annual Credit Managers Survey will be revealed. “There’s a lot of good trend analysis during the session,” Mic Mount says.
It's also a great place for newer talent in the industry to expand their network. “Just being able to sit with people at all different levels of an organization and talk to them about the industry is a huge benefit,” Holguin says. “And if you’re a seasoned veteran it’s a great place to identify talent.”