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TRACTO-TECHNIK Finance GmbH
17.08.20 - Since the foundation of TT's own financing company last year, we have also stood by our customers and sales partners as a competent and reliable financial services provider. We spoke to Thorsten Wedi, Head of Financial Services, about financial risks in civil engineering, optimal financing solutions and the range of services of TRACTO-TECHNIK Finance GmbH.
TRACTUELL: Mr. Wedi, money is a matter of trust. That's why our readers are naturally interested in finding out who you are. Please introduce yourself and briefly describe your background to date.
Thorsten Wedi: My career is quite normal. After the 'Abitur' (school-leaving qualification) I completed a banking apprenticeship and then studied business management, majoring in finance. As part of my thesis I had my first contact with a leading commercial vehicle manufacturer. I worked there for 15 years in various roles in sales financing, some in direct sales, others in sales support and most recently as head of department for the area Group Vendor Financing. I am married and a father of two children aged 7 and 12.
TRACTUELL: So you learned the financing business from scratch and have plenty of experience. To what extent does your knowledge of the commercial vehicle industry benefit your work at TRACTO-TECHNIK, or, to put it another way, where are the similarities and differences of the two industries?
Thorsten Wedi: Both industries are very capital-intensive because commercial vehicles and construction machines are capital goods, which raise similar financing issues. Companies in the construction industry are rather conservative in these areas, ownership still plays an important role. Then there are cyclical differences because in civil engineering there are seasonal fluctuations, especially in winter. The construction industry also has a greater financial standing on average. Notwithstanding the above, both industries face the same big challenges with regard to the lack of qualified staff, be it truck drivers or machine operators.
TRACTUELL: How do our customers and partners benefit from TT's own financing company in view of these risks and challenges? What benefits does the financing company offer compared to banks or other financial services providers?
Thorsten Wedi: Money cannot replace staff, but it can help to defuse the staff situation. For example, with financing it is possible to exchange older, labour-intensive machines for more efficient, new equipment quicker. With the new machine the customer can carry out more tasks with the same staffing level.
In addition, with our tailormade financing solutions, the building contractor can concentrate on their core business. Because we can give a positive answer within a short period of time and generally do not request any other collateral, which is a big advantage over principal banks. The line of credit there can be used for other investments, for which dealer financing is not available, such as for the construction of administration or industrial buildings.
We also offer excellent interest terms and seasonal instalments, e.g. a winter payment holiday of 3 - 4 months is possible. Also no principal bank or other financial services provider offers modern types of machine use, the so-called Operate Leasing. With Operate Leasing the customer uses the bore rig for the agreed operating life and simply returns it to Tracto-Technik at the end. They do not have to worry about the disposal of the machine, we look after this through our used machine service and our global sales network. In addition, we also offer insurance. The customers get everything from a single source.
TRACTUELL: Who can make use of these financing solutions and what is financed?
Thorsten Wedi: We basically serve all end customers and partners. We are steadily expanding our activity radius. We started with sales financing on the domestic market and are currently advancing the expansion to the countries of our sister companies, i.e. end customers in Germany, Great Britain and France can now avail themselves of financing solutions. The USA and Australia are currently in preparation. At the request of sales partners, we will also be able to finance their end customers at a later stage.
We generally finance new and used machines from our production, trade products such as cable winches, which have their own serial number and also pipe bending machines from PBS. It is also possible to integrate supplementary products, e.g. trucks or trailers, in the financing of a drill rig for the completion of the drilling train.
TRACTUELL: With "financing" most people think of the classic instalment credit or vehicle leasing. What financing models does TRACTO-TECHNIK Finance GmbH offer exactly and what is each model recommended for?
Thorsten Wedi: We can discuss all individual requirements and offer classic credit as well as many different forms of leasing and hire purchase.
Hire purchase is a super financing instrument if the customer wants to be the beneficial owner of the bore rig and make use of the write-downs. With the agreement of a balloon (final) payment at the end of the financing very low monthly instalments are possible, with which I can maintain my liquidity over the long term. If I continue to use the machine after the final payment, then this has positive effects on my profit situation because there are no more instalments to be paid from the revenue generated.
Credit financing is similar in many ways to hire purchase with the difference that the customer is already the owner of the machine at the outset of the financing, however, the machine is assigned to the lender by way of collateral. In practice the differences between credit and hire purchase are marginal for the customer, we are providing more and more hire purchase solutions.
The importance of classic finance leasing has decreased rapidly. Because every finance company is obligated to sell the property at the market value on expiry of the financing, many customers get an unpleasant surprise. Apart from the calculated monthly instalments, they also have to pay the difference between contractual salvage value and market value, sometimes the full amount. A supposed deal or special offer with excellent interest rates quickly turns into a cost trap, especially as for some time now the handling of salvage values is increasingly monitored by the tax authorities. In any case, upon express request we also provide this classic leasing.
Operate Leasing is very interesting for certain constellations. As I mentioned earlier, the customer uses the machine for an agreed fixed period and returns it to us on expiry. This type of financing is useful, e. g., for dealing with additional orders. I have often had to provide a service over a certain period of time, generally several years. New machines are generally required. If I am not quite sure whether I can also utilise the machines after the order, then Operate Leasing is the right choice. This type of financing also helps me with my job-order costing because uncertain assumptions about realisation proceeds of used machines disappear. In perspective, with this financing model we also want to offer a fixed monthly instalment for the maintenance and also later for the machine wear.
We give extensive advice on the various financing models in order to find the best solution for the customer's interests.
TRACTUELL: Irrespective of the type and volume, every financing wants to be well secured, but you can never rule out certain risks, e.g., that a bore rig suffers irreparable damage or is stolen.
Thorsten Wedi: Absolutely! We provide smart and attractive insurance solutions precisely for these purposes, e. g. the all risks cover. With this policy every conceivable, unforeseeable damage is covered - apart from damage resulting from war or warlike events, nuclear energy, intent or operational wear, and even from operating errors. And this is at fixed monthly instalments, even after a claim. The so-called GAP insurance, which covers the difference between the redemption value and replacement value of a machine, for example, if it was stolen, is also included.
TRACTUELL: What does a customer or partner have to do if they want to take out finance with Finance GmbH and what is the process?
Thorsten Wedi: I am happy to provide advice on financing matters at any time. Interested customers or partners can reach me by telephone or e-mail. You can also mention your request to our sales staff. Generally our customers have the desired financing offers on the table within a few hours. Often with a positive answer, i. e. the customer does not have to submit any further documents.
Absolute discretion is assured. All financing applications and the documents submitted are treated in the strictest confidence. We guarantee you this as a reliable financial services provider.
TRACTUELL: Mr. Wedi, thank you very much for this enlightening conversation!
Manager Financial Services
Tel.: 02723 / 808-205
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