When it comes to equipment finance and leasing, recovery planning isn’t something you do after a customer becomes delinquent; it’s something you build into your process from the very beginning. A solid recovery file created on day one can mean the difference between a quick, effective resolution and months of costly delays.
So, what should this file include? Beyond the obvious details, such as when the account became delinquent and how far behind they are. Whether they’ve been responsive, there are 3 key strategic data points and documents you’ll want to gather upfront to keep yourself prepared:
1. From the start, document exactly what the equipment is. Not all assets are equal; recovering a $5,000 compressor is different from recovering a $70,000 excavator. Knowing the type, value, and condition of the equipment informs your recovery strategy and helps determine if the asset is worth pursuing aggressively.
2. As early as possible, note where the equipment is stored and how it’s being used. If feasible, equip high-value or mobile equipment with a GPS tracking device. While some equipment may remain stationary and not justify the added cost, anything that can move, especially when there’s a significant balance still owed, benefits from the extra layer of security. Don’t wait until an account goes silent to look for contact points. Your recovery file should include:
• All known phone numbers and email addresses
• The primary business contact and any alternate contacts
• Names and details of other key people involved (such as site managers or accountants)
Having multiple avenues of communication ensures you can act quickly if the primary contact becomes unreachable.
3. Another critical part of your recovery readiness is making sure your security interest is properly perfected. Verify titles, confirm UCC filings are complete, and keep all supporting documents organized and up to date. If your lien isn’t perfected, you could face legal obstacles or delays when it’s time to recover the equipment.
The point of creating this file on day one isn’t just to check boxes; it’s to have a clear, actionable plan ready the moment a customer goes delinquent. When you know the value and location of the equipment, have perfected liens, and can quickly reach out to multiple contacts, your team can move decisively instead of scrambling to gather information under pressure.
In short, a well-prepared recovery file is an essential tool for any equipment finance operation. By collecting the right information from the start, and keeping it current, you position yourself to act efficiently, protect your assets, and reduce losses if things take a turn.
–Joe Castello, VP of Asset Management