THE PAPERLESS WORLD OF PENTECH
Looking To The Future, Why One Lease Financing Company Took A Giant Green Step
CAMPBELL, Calif. -- There are lots of slogans being bandied about these days, all admonishing the businesses and individuals to become more environmentally aware and eco-sensitive. Slow global warming. Buy green. Work green. Reduce your carbon footprint. Contribute to sustainability. Save a tree. Recycle.
While the long-term impacts of the current environmental awareness movement remain to be seen, many enlightened companies in different fields have been influenced enough to examine how their day-to-day business practices might be improved. The leasing industry is no exception.
Up until quite recently, the myriad forms – typed, printed, copied, recopied, filed, mailed, and recopied again - of a typical transaction surrounding a straightforward application for commercial equipment lease financing was thought necessary and unavoidable. It was just the ways things were done.
But a more thorough inspection by one leasing company revealed a paper trail that was amazing in its consumption of paper. Not only was it incredibly long, it revealed itself to be clearly wasteful and, in this technological and environmentally savvy age, unnecessarily costly, grossly inefficient and environmentally unfriendly.
In 2004, Jim Ochsner, the chief operating officer of Campbell, California-based Pentech Financial Services, Inc., a leading funding source in small ticket and commercial lease financing for businesses nationwide, decided to take a hard look at how much paper was involved in his company’s start-to-finish application and approval process for a simple lease financial transaction. What he found was astonishing. Bottom line, the built-in inefficiencies of the current system was hard-wired to ultimately constrain the company’s growth.
“In a typical application process,” says Ochsner, “we took valuable time to make certain that not only numerous parties would review the application, but that it was stored safely. We printed out an application received in electronic format. We assembled a file. We made a duplicate file for approved deals to keep in our processing office in San Diego for future reference. We stored both the approved and declined files. We Federal Expressed the file between offices. We disassembled the file in order to make a duplicate copy for onsite retention. We sent the original file to our bank for safekeeping until the account was repaid and closed. We stored the original closed file at our headquarters. We then had to destroy the closed account file in two locations. Add to that more time spent to locate a misplaced file or documents, and it wasn’t hard to calculate the impact on our business operations.”
From the time an initial request was made to Pentech through various application approval steps, reports, summaries, lease documentation forms, bank requirements, photocopying booked transactions, not to mention the duplication of complete sets of any given file for various internal departments including customer service, plus the express delivery of more copies of more files between far-flung company offices, Pentech estimated it was using more than 750 reams, or about 400,000 sheets, of paper each month. That translated to five million sheets of paper annually.
As Ochsner recalls, “with the company in a growth mode, and faced with even more applications and backup work, we simply couldn’t continue to accumulate more paper like that. On top of everything else, we were running out of filing cabinet space.”
Clearly, thought Ochsner, we could do better. A fresh, new, enlightened approach for Pentech was definitely in order.
Pentech’s president and CEO, Ben Millerbis, quickly agreed. “We recognized the need for a new approach to our operations,” says Millerbis, “and the company made the required financial commitment to implementing such a new, streamlined approach.”
After spending considerable time investigating various alternatives, Pentech made the decision to purchase Hyland Software’s OnBase, a new optical imaging system that would convert Pentech’s paper-driven application business operations into a virtually paperless one.
Understandably, the anticipated changeover involved a considerable up-front investment, but Millerbis and Ochsner felt it was a financial expenditure that would be recouped in partover time through paper cost savings and in part immediately through dramatic time saving efficiencies.
Ochsner says that in researching the hard dollar costs associated with all of the above, which not only included paper, but toner cartridges, file folders, FedEx charges, and file storage, it appeared that the cost savings realized immediately from implementation of a document management system would, within 24 months, offset the cost of the system, including hardware, software and professional fees for installation.
What is notable, says Ochsner, is that the hard dollar savings represent "green savings, too (e.g. significantly eliminating the use of paper-based products, reduceding the use of fuel for FedEx delivery jets and trucks, reducing the use of toner and electricity for printers and photocopies, and reducing the need for both onsite and off-premises storage space.
"Not only did we streamline our own operations," says Millerbis, "but we have made what we consider to be a significant contribution to the overall business community’s efforts to do what it can to be environmentally sensitive and aware, and we’re delighted with that.”
Installed and in operation since last year, Pentech now captures and converts all of its paper-related lease financing documentation into individual, easily accessible and flexible-to-use electronic files
"Pentech may be the only leasing company of its size to have taken this step," says Ochsner. "We have eliminated virtually all paper generation company-wide. Instead, everyone has easy and instant visibility of all our virtual files. As predicted, we have improved operational efficiencies internally, resulting in improved, faster service to our national network of brokers and ultimately to our business clients around the country."
Ochsner says that while the hard dollar savings will eventually more than cost- justify the system, the "soft" dollar savings "essentially cost-justified the system from day one as it improved our processing productivity and efficiency, which both gave us a competitive edge and lead to a higher level of customer service. It also provided significant benefits to our operating efficiency by providing employees in various office locations real time access to any file on a concurrent use basis, which eliminated the need to e-mail documents between offices and departments, or send the actual files to different departments, or having to track down files, or looking for misfiled documents."
And the company, and its employees, have the satisfaction of feeling "green" by actually seeing and knowing that paper, and trees, are not being wasted.
"We even scanned all of our earlier paper-based files into the new system," reports Ochsner. "The issue of a shortage of storage space disappeared seemingly overnight. Thirty-seven filing cabinets at Pentech are now empty."
About Pentech Financial Services, Inc.
Headquartered in Campbell, Calif., with an office in San Diego, Pentech Financial Services is a leading provider of small ticket and commercial lease financing in the B-C credit market nationwide. Founded in 1978, Pentech has provided more than a billion dollars worth of lease financing to small and mid-sized companies across the country.
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