Case Study

New US Captive Finance Company

We were able to complete this assignment on time, on budget, clearly exceeding expectations, something part time internal resources were unable to do one year earlier

Context

White Clarke Group was tasked with development of a comprehensive market analysis, target operating model and a full business case for the creation of a new captive retail finance operation in the United States.

Challenge

Our client, whose current operating model provided for a 100% outsourcing proposition of all retail finance functions (front-office – originations, mid-office – servicing and back-office – collections) to third party lenders, was seeking a credible, independent assessment of the viability of an insourced retail finance operation.

“Who you gonna call?” That refrain from the 1984 hit movie Ghostbusters could not have been more appropriate, as our client lacked knowledge of where to turn when facing the challenges of complex analyses over an extremely short timeline (4 months).

Furthermore, given the parent company’s extremely risk adverse approach to business , any proposed target operating model and business case had to formally satisfy a litany of risk mitigation strategies; hence a “more is more” approach, in terms of risk management (identification, prioritization, probability, impact and mitigation), was required.

Solution

Business Consultancy Services

In order to provide our client with exactly what was required to achieve a “first time sign off” from the parent organization and not multiple iterations of the business case and target operating model, we completed the following:
•Baseline evaluation, comprising historical volume/trend analysis (e.g., proposals underwritten, contracts funded per FTE, decision and funding turnaround times, average arrears balances, etc.), ensuring that future NewCo volume, staffing and revenue/profitability projections were based on quantitative analysis and not conjecture
•Dealer visits; structured interviews with a number of dealers to understand what they deemed to be important, valuable and beneficial from the finance company, relative to business processes and supporting technology
•Comparative analysis, provision of (quantitative/qualitative) comparative analysis of captive finance companies key performance indicators and non-public domain best practice; providing the basis for “what does best look like?” in terms of benchmarking NewCo’s future performance
•Target Operating Model; a detailed and implementable Target Operating Model, clearly identifying end-to-end service offering (Originations/Underwriting, Payout, Customer Services, Collections, Remarketing and Dealer Services, as well as supporting functions such as IT and Compliance) distribution channels, functions, staffing and associated organizational and customer benefits
•Risk Management process; development of a practical risk management process, which clearly identified potential NewCo risks, their impact and probability, as well as identification of pre-emptive mitigation actions (in advance of day 1 go-live)
•Identify US state/federal compliance requirements, including usury rules, regulatory and compliance mandatory requirements, sales taxes and licensing requirements, thereby mitigating potential risks well in advance of day 1 go-live
•Detailed “To-Be” business process and supporting technology requirements for front, middle and back-office functions
•Insourcing options; we analyzed various options associated with migration to the insourced NewCo operation, given the risks associated with migrating multiple third party providers to NewCo over a designated period of time
•“To-Be” (NewCo) resource plan and organization structure, ensuring that sufficient resources and supporting (NewCo) organizational structure have been identified to support completion of projected volumes and dealer and customer service level requirements
•Position profiles/expert models and competency framework, enabling their usage as inputs into formal recruitment activity well in advance of day 1 go-live
•Implementation Plan, including key milestones, responsibilities and dependencies, ensuring a clear line of sight from “today” to day 1 go-live

For more detail on any aspect of CALMS, please contact us today.

Results

Work commenced in early August 2012 and was completed in early December 2012; by the end of January 2013 the parent company was satisfied that the Capital Expenditure (CapEx) full business case was compelling and authorized the funding of the project.

Benefits of White Clarke Group Business Consulting Services
•We were able to complete this assignment on time, on budget , clearly exceeding expectations, something part time internal resources were unable to do one year earlier
•We were able to bring independent perspectives to the project, unencumbered by any client “inside the box” thinking in terms of the NewCo target operating model and associated full business case
•Wealready had practical expertise in developing insourcing models (for green field sites)
•The level of detail required for the risk adverse main board directors was known in advance of the project, thereby enabling identification of risks and their constituent mitigation actions throughout the project as opposed to being hurriedly developed during the last week of the project
•The level of detail provided with regard to “To-Be” business processes and required supporting technology enabled the client to rapidly develop a comprehensive Request for Proposal (RFP) from technology vendors well in advance of day 1 go-live; all too often this process is so time consuming that provision of the RFP to potential suppliers is “outdated” by the time they receive it
•The position profiles/expert models provided were sufficiently detailed; they were distributed to third party recruitment agencies in order to accelerate the Recruitment activities and were completely fit for purpose; hence potential candidates were ideally suited for the NewCo insourced operation

For more detail on any aspect of CALMS, please contact us today.

We’re excited to be able to offer this new program to Yamaha dealers and believe that our new relationship with White Clarke Group is an integral component of this new program.
Leone Foxwell, National Manager Inventory Finance, Yamaha Motor Canada