Techniques: Microcases


Problem: Slow and costly credit checks
Solution: Automated online credit approval
Payoff: Customer satisfaction; better use of staff time

When Eric Zucker thought about taking his company online, he faced a troubling dilemma: What good was having instant digital access to his customers if the back end of his business was still running on analog time?

Zucker is president of MicroLease Funding Corp., a $6-million company in New York City that provides lease-financing services to vendors of business equipment. The leased products -- such as credit-card terminals, copiers, office furnishings, and computers -- are all priced below $10,000.

In 1999 the one-year-old business was growing fast, fielding roughly 4,000 lease applications annually from vendors. (Projections call for increasing to 4,000 per month by 2001.) But the credit-approval process was clunky, slow, and expensive.

For each lease, the vendor would fill out a credit application on behalf of the purchaser, then fax it to MicroLease. There, an application agent would manually enter the information into a database and check it against credit-bureau data, using the company's custom credit-scoring system. After deciding on the credit request, the agent would fax the paperwork back to the vendor. Finally, if the lease had been approved, the vendor would send the documents back to MicroLease for its records. Not surprisingly, it could take MicroLease agents more than an hour to process each application.

Things had to change. Zucker wanted to grow his customer base and become a brand name in the industry. But how could he attract more vendors to such a time-consuming service? "We knew we needed something that was very quick," he recalls. "These days everyone wants instant results."

He decided the Internet was the solution. Vendors could enter credit-application information directly on a MicroLease Web site, doing away with all that database entry and document faxing.

However, somebody still needed to evaluate each purchaser's credit, a process that could take 30 minutes or more. If cases got backlogged, vendors still might have to wait hours or even days for approval. Zucker considered developing a custom software program to automate that part of the operation but ultimately scrapped that option as too costly and slow. He looked for outside help.

He found, in Dedham, Mass., which offers an Internet-based platform that connects businesses to financing partners and information sources in real time. The company's Global Financing Network automates the entire credit-approval process, from accessing credit-bureau information to automating credit scoring to notifying applicants about decisions. Using MicroLease's credit-scoring criteria, eCredit customized its system, then linked it to MicroLease's Web site. MicroLease pays a fee for each transaction based on the contract term, the scoring complexity, and the company's annual volume of contracts.

Zucker's Web site -- -- officially launched in October 1999. Now vendors can provide authorized leasing quotes to their customers in minutes and close transactions immediately. "It used to take hours to make a credit decision," says eCredit president Peter McKay. "We cut that time down to seconds." As Zucker puts it: "It's turned the vendors into application-processing people. Before, our application people had to input all the information; now the vendors log on, input the information, and get approval instantly." An added bonus: the increased efficiency has allowed Zucker to reassign three of his eight credit-processing agents to other jobs, such as handling accounts receivable. As a result, he says, "we collect on outstanding funds faster."

Meanwhile, as Zucker had hoped, is gaining popularity with vendors. Though he can't yet provide hard growth figures, he says more than half the applications MicroLease gets these days arrive through the Web site. The faster credit process should also boost business for vendors because, Zucker says, they can close deals faster. He hopes the new system will, in turn, keep moving MicroLease toward stardom in his industry.

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