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John Paul Getty, the oil tycoon said to be the richest man in history, once remarked: "If it appreciates, buy it. If it depreciates, lease it."

The 80/20 rule – what happens to the remaining 80%?

Posted: Monday, 11 September 2017 @ 12:56
We are all familiar with the 80/20 rule – where 80% of your business is more than likely generated from 20% of your customer base, but what about the 80% of customers left behind?

Funding Circle has been making waves over the past week as it refocuses “its energies on its most highly engaged business finance brokers”.  In other words, it’s having a cull.

AltFi reported that Funding Circle, known to have approximately 1,000 active brokers at present, is cutting off 300 brokers from its portfolio.  While it may be a practice highlighted by Funding Circle’s recent move, we all know that this ‘cutting’ is a cyclical practice within the leasing and finance industry, usually instigated by head office rather than broker managers. Often this is a  part of a change of business development strategy in order to streamline their processes after they have achieved their own volume targets.  All well and good, but it creates uncertainty and a lack of trust.

The practice saw a particular rise in 2008 as some funders decided to chop a percentage of brokers that were perceived to be too small or to bring in smaller amounts of business.  Having worked in the industry for some years, at funders of all sizes, it’s something I have seen happen time and again, and as a broker manager I can tell you that it doesn’t sit well. 

The questions that a funder has to ask themselves are how much does it cost to maintain the relationships and, crucially, what is the value of the relationship with a particular broker?  To my mind, and that of the senior management team at Rivers, it isn’t a question of blanket policy but the value of each relationship in its own right - the benefit of being a niche SME funder perhaps, that services both small and large brokers.

For us, the importance lies in the understanding between the broker and Rivers about the way we work.  We speak to people directly and value our relationships with brokers and transactions of all sizes.  Rivers is a small ticket soft asset funder and every deal is important to us because it is important to the individuals involved - that customer, that broker, that supplier.  

For us we will always welcome the 80% left behind.

Rivers Leasing Limited

Amba House, 15 College Road, Harrow, HAI IBA

Telephone: 0208 424 8262

Registered in England. Company number: 07376100.

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FCA Registration

Rivers Leasing Limited - FRN 736080

Rivers Leasing is authorised and regulated by the Financial Conduct Authority

Rivers Leasing is a subsidiary of Rivers Finance Group PLC.
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