Subscribe
Share
Share
Embed
Welcome to Portfolio Perspective: Managing Risk & Seizing Opportunity, a podcast focused on the asset-based lending industry. Join Andrew Pace, Chief Client Experience Officer at Asset Compliant Solutions, as he interviews experts, shares insights, and explores strategies for managing risk, optimizing portfolio performance, and seizing opportunities in an ever-evolving financial landscape. From regulatory changes to technological advances, each episode provides actionable takeaways and deep dives into industry trends. Whether you’re a lender, servicer, or recovery expert, this podcast offers valuable perspectives to enhance your approach and improve outcomes.
I should know for each of my team members what they want to continue to develop in their skill set, what they want to achieve today, tomorrow, next year, in five years. If they're happy where they're at and they wanna continue that through when they retire, I should know those things.
Andrew:Welcome back to ACS Portfolio Perspective. I'm your host, Andrew Pace, Chief Client Client Experience Officer at ACS, joined today by Mark Musamici, Director of Risk Operations at Volvo Financial Services USA. Mark oversees the full spectrum of VFS US risk operations, account resolution, collections, repossession, and remarketing for one of the world's most recognized captive finance companies, serving the Volvo Trucks, Mack Trucks, and Volvo Construction Equipment brands. A graduate of Volvo's Early Career Professionals Leadership Program and a Monitor Magazine 40 Under 40 honoree, Mark has spent more than a decade building a risk operations culture grounded in process discipline, vendor partnership, and intentional leadership. He has navigated Volvo Financial Services through one of the most sustained downturns in the commercial transportation sector has seen in a generation.
Andrew:Mark, welcome to the show.
Mark:Thanks, Andrew, and you make me sound really good, but I'm going to stop right there and say I've got to give full credit to the team, because they have gotten us through a whole lot over the last few years, but thank you. I appreciate the intro, and I'm happy to be here.
Andrew:Again, glad to have me on. I'm honored to have you with us today. With your experience working inside a captive finance organization, I want to start by helping listeners understand the mindset and operational approach that makes captives unique. From your perspective, what makes a captive finance company fundamentally different from an independent lender when it comes to collections and recovery?
Mark:Yeah, no, that's a fantastic question. I think the first thing is, we always talk about here at VFS, why do we exist? Our captive finance space is pretty unique. We exist to help our OEM partners sell more trucks, sell more construction equipment, keep the factories busy, and successfully manage that from a portfolio perspective on my end and my team to make sure that we're supporting those brands, but also operating as an efficient finance company that is profitable and helps our overall group and adds value to stakeholders. So one of the things that we really look at as a captive is, how do we support that brand?
Mark:How do we support the Volvo and MAC and Volvo Construction Equipment brand? Help them move more equipment, more trucks, but also do it in a way that makes sense and that's sustainable for us to continue operating as a successful finance company. Think that balance can be very challenging at times, but it's a challenge that's very rewarding. I think when we remember why we exist and what we can do, there's great opportunities that come forth with our customer base and with our dealer networks and with our OEM partners.
Andrew:In talking about those partners, how do you balance the priority of protecting the Volvo, Mac, and Volvo CE brands while still delivering strong portfolio performance?
Mark:Yeah, it is really quite the balance. You have to have a team in place, and I think I know that we do, that's very skilled at what they do. It can't just be purely just hard collection effort after hard collection effort after going to repo, etcetera. Yes, we still have to draw the line in the sand. Yes, you still have to have that skill set to be able to kind of hold customers accountable to their contractual obligation, but I think the bigger picture is understanding that relationship, and that every conversation that you're having can impact our brand and the overall look.
Mark:It also comes into factor with selecting good partners. ACS that we utilize, we use you guys for on the repossession side, and historically the collection side as well. It really comes down to vendors that understand our brand and can shift to help us support what we're trying to do. Again, hold the line when we need to, especially in a downturn, a freight recession, an extended freight recession for multiple years, and ultimately keep as many of our customers in their trucks or construction equipment as we can, and knowing how to balance that with when it's time to move forward, and still be able to perform in a good way, to be able to keep delinquency at a healthy level, to be able to still go after the avenues so that we're not losing money for our group. It is quite the balance, and there's no perfect, nobody has the crystal ball on what's going to happen next, but I think when we understand the relationship piece of it, which our team does and they're tasked with doing, they value those relationships, but still know how to get the job done.
Mark:It's not for everybody, the captive space, but it's very rewarding when we have success stories. For
Andrew:sure. As you talked about relationships, what role do customer relationships play in decision making during challenging collection situations?
Mark:Yeah, again, good question. It plays a huge factor in those decision making timeframes, because you could have a customer that's not cooperating, not communicating whatsoever, but fortunately, as a captive finance company, we do have our dealer partners, we do have our OEM partners that sometimes will get involved and help the customer understand that full picture relationship and say, Okay, this is more than just your bank calling up and saying, Hey, you're due on this. It's how do we make it and get this customer full circle through this down cycle, through whatever they're dealing with, this downturn management, to be able to get them out on the other side, to ultimately buy more Volvo trucks, more Mack trucks, more Volvo construction equipment, and understanding that perspective and how to bridge that gap. We've seen a lot of success stories where we do get those customers through those times, and it doesn't work every time. We know that there be failures in our line of work in this industry, but the ones that we do help through those downturns, whether through modifications, sometimes payment relief, we might be willing to do that from a bigger picture relationship aspect to support our OEMs, to support our customers in what they're doing, and understanding their business.
Mark:I do feel a sense of tie to these customers and their businesses, a deeper understanding than maybe, and not to say we're perfect, I'm far from perfect, but it is nice to know the industry that we serve, and I look at it that way. We serve this industry. We serve these customers. We're offering a service to them of financing. Everybody knows captives don't typically have always the cheapest rates, but it's where we add that value to that customer when they're going through something, and the team here does a great job of understanding that and trying to help the customer through anything that we possibly can.
Mark:Keeping that in mind, I think, gives us that bit of a extra advantage in those discussions. They understand we're connected in with the full manufacturer and dealership, the full picture there with the customers.
Andrew:Thank you. For collection teams outside the captive world, what special handling requirements are most surprising or perhaps most misunderstood?
Mark:Yeah. I think knowing the industry, but it's like there industry segments and regions and pockets of challenges that a lot of non captive banks might even have better insights than we do on certain things, but it's understanding those customers. It's understanding, okay, are they hauling just general freight, or are they bringing refrigerated goods from the border down in Southern Texas all the way up across the country? They're bringing auto parts up to Detroit. Are they bringing produce over from California over to the East Coast, etcetera?
Mark:So understanding the customers, taking that deeper dive, frankly, it does take some extra time. You have to develop that relationship. So I would say even a non captive space, that relationship and understanding goes a long way. When you end up having a workout scenario for a larger customer, whether you're a captive finance company or an independent or a bank, I think it adds value when you understand truly what your customer is doing. And when you have those discussions with them, they realize they know they can pick up pretty quickly if you actually care about their business, or if you're just simply just dialing for dollars and just trying to get that next payment.
Mark:When you talk about, Okay, yes, this is great that we're getting through this time that you have made these payment arrangements, but what's next? What's your next thirty to sixty days? What's your turnaround plan look like? Are you downsizing your fleet? Are you picking up more profitable hauls?
Mark:We recently just actually It's a Volvo Group product. Volvo and Mack Trucks has a load finder that we paired with another partner that's now offered a free service to our customers. So my team, as collections account resolution that is customer facing, has a ton of customer touch points, it's a value add for us to share that out with our customers and saying, Hey, not only are we calling to, yes, get our payment and get payment arrangements and maybe a potential modification or workout arrangement, but also here's something to help you and your business, being able to give the customer something back. And not everybody will have that opportunity. We're very fortunate that we have that from the bigger Volvo Group picture.
Mark:But I think understanding that customer, understanding truly what they do and what they need from you as their lender helps you form that partnership where you can create a bond that really lasts for decades if you do it right.
Andrew:Right. You know, it's great advice. They're not just an account number. It's all about building the relationship. Is there an example where protecting the brand guided your approach differently than a traditional lender might?
Mark:Yeah. I think I can weigh in on a somewhat recent example. We had a relatively mid sized large fleet that was really struggling. We had gotten input of how critical this was to the bigger picture, the dealership specifically. It was their largest customer for this respective dealership, that it was also a pretty big player with our OEM partner, Volvo Trucks.
Mark:So those things factored in. We still had to make sure that we were abiding by our policies and procedures, of course, and making sure that terms stayed reasonable. But I would say we probably gave it that extra call, that extra involvement where we had multiple layers of our leadership team in addition to our account resolution specialist in that case being involved, having those discussions with the dealership, with the OEM partner. And to me, that's an opportunity. Did it take more time?
Mark:Was it a little bit extra time out my personal day and some others on the team and my leadership team? Absolutely. I mean, we had four or five or six people at any given time working through this workout arrangement, and I can't say that it's all rainbows and butterflies. It's not. Some of it, you really have to have some tough conversations, but taking a step out of that and seeing the big picture, while also still educating people in the collective group that, Hey, we still do have a job to do here to collect this money, to bring it in, to keep it as a performing contract and assets on our portfolio, that's an important thing, and we go back to that balance, right?
Mark:It's like, how do you balance the bigger picture Volvo Group or any OEM partner, what their goals are, what the dealership goals are, what the customer goals are, and what's actually reasonable? So it's not always perfect, it's not always pretty, but we navigate through it. Think having those established relationships and having a dynamic team that can have those conversations, that really can move the needle and save a customer, frankly, through a down cycle, and just to bring it full circle, as we're starting to see some life in the industry right now, some good signs, light at the end of the tunnel, we all hope, right, early in January and February and heading into March this year, spot rates, contract rates, those kind of things trending up. It's something where if we can get these customers through that really tough time, and they have a plan, and they communicate that plan to us, and we work through it with them, it's very rewarding. Despite the extra efforts that it takes, it's worth it, right?
Mark:Oh, I mean,
Andrew:100%. It's all about preserving the relationship, and when upper management gets involved, what kind of message does that send a struggling customer that you have upper management, senior level, executive level managers, and VPs getting involved, and trying to help preserve those big key relationships? So that background sets the stage perfectly because the past few years have been particularly challenging for anyone supporting transportation, vocational, or even construction equipment portfolios. So let's shift to the broader market landscape you and your team have been navigating. So looking back, let's say, the last three years, what were the biggest challenges your portfolio faced across the transportation and equipment markets?
Mark:Yeah, fair. You said only three. I probably could talk about this for the entire segment, but I also know me, Andrew. I don't like to be a negative outlook person. I'm pretty positive, putting a smile on my face each day when I walk in here, and the team does a good job of that too.
Mark:But biggest challenges, there's definitely been several. I think just starting off, as you looked at, as we came in from 'twenty one and 'twenty two, the supply chain constraints, the issues of the OEMs delivering trucks, specifically on the truck side, CE went through some of those challenges as well, and we're a little bit different from a lot of lenders in that we support both spaces, especially on the captive side. CE did face some of those challenges, but on the truck side, people couldn't get trucks, and if you could get a truck, you were making a whole lot of money. Times were good for those that had units out there that they were running. They were very profitable.
Mark:Even ones that probably didn't have the business acumen to be expanding were expanding. So that leads me into what were the biggest challenges. The first thing, as soon as the market corrected and came back down to earth as OEMs were delivering these, not just Volvo and Mac, but all of the OEMs in the trucking space started delivering these units, there was a bigger supply of trucks than there was demand, so that was one thing. Parts of our business, not my area as much, had to manage inventory with our dealer network as we're getting these in, and maybe there was as much demand. The thing is, is there was a lot of demand still through early twenty twenty three for those units.
Mark:So first challenge I would outline is navigating that when demand started to wane a little bit, but we still had pretty strong demand on our side, but I know some others in the industry struggled with that. I think the bigger thing is when there actually started to be customer failures, we were well prepped for it because a lot of our team here actually went through the 'eight, 'nine financial crisis. We're very fortunate to have some really tenured folks who have been here through those cycles. They've seen what it's like for the entire portfolio to, for lack of a better word, be on fire. Every single customer is struggling in those cases.
Mark:That's not what we had happen over the last few years, but it was very specific to the long haul transportation sector. So I think challenge one was, as those started to happen, those failures started to happen, how do you navigate that? How do you be dynamic enough as a large global company to shift your style to be, Okay, well, if anybody wasn't paying back in 'twenty one and 'twenty two, it was because they just weren't managing their business the right way, versus as you got into 2023, 2024, continued into 2025 and early 'twenty six, even the best of the best customers out there were feeling a financial strain because of the struggling market. How do you navigate that with the customers that, Oh, well, we want to save every customer? That became unrealistic, right?
Mark:How do you navigate through that initial downturn? I think that was challenge one. I think an additional challenge was, Okay, as we're doing workout arrangements, modifications, what do the logistics look like? Fortunately, we had actually done a good bit of what we call downturn prep, downturn management. So in 2021 and 2022, we spent a lot of time very intentionally, our executive team, myself, my leadership team, we had a lot of conversations.
Mark:We looked at skill sets across the business. Being a captive finance space, you have a lot of people within the operations, the credit side, even on our commercial sales team that have a background in different areas. Being able to shift people in and knowing their strengths and where they can shift to, being able to be dynamic enough to make that adjustment, bring somebody over maybe into the back end of the portfolio to help, even if it's for a temporary timeframe. Just to use a small example, we had one of our senior credit analysts who's underwriting large transactions, $10.15, $20,000,000 transactions, step out of the credit space, even though credit volume and application volume was still quite high, stepped out of that and came over and was helping us on the remarketing side because he was very knowledgeable of the collateral. He was well trained and was able to get up to speed with our remarketers.
Mark:Again, another thing that we have here at BFS, Global Financial Services, that maybe not everywhere has, we have our own in house servicing across the board all the way through to remarketing, a very tenured and experienced remarketing team. So being able to shift that, we were intentional about that downturn prep. That helped us as we actually got to the transportation, the freight recession. Just to touch on one further main thing is the prolonged. Nobody had seen something last this long specific to the over the road long haul trucking.
Mark:You're talking about going on three, three and a half years, pushing towards four years where really, you could argue that it's been in a freight recession, at least three years minimum. That is something that really hasn't been here. So how do you maintain that? What it came down to, Andrew, the biggest thing, yes, your systems, your processes, your policies are very important. You got to stay true to those things.
Mark:Being able to shift and adjust with the market too, as a global company like Volvo is, was a challenge, but what it came down to is people, and leadership, and people stepping up and having each other's back, talking through those challenging times, being there for supporting each other. I won't get too emotional on here today, but I have some personal things that have happened over the last few years where I knew the team had my back. No matter what I was going through personally, I would come in, and I knew that they had my back and I had theirs, and it's amazing how far that went. Our team, because over the last three, three and a half years, there's probably a lot of teams on the operational portfolio side that have seen a lot of turnover. I don't want to jinx anything right here, but we really haven't seen that on our end.
Mark:Most of our folks have continued to grow and learn, and frankly, they've been given more opportunities to even further their skillset in some of these workout scenarios that maybe they were more so doing just historical collections back five or six or seven years ago, and we call our collections team account resolution. That's by design. There's a lot more to it, especially in a captive space, than just collecting, just dialing for dollars. It's really resolving. It's understanding the customers, but that doesn't happen, that team's not empowered to do that without support.
Mark:Again, it came down to people for us, being there for each other, looking out for each other. There's a lot going on in the world, obviously, today, and just understanding that and being there for each other, building a culture where we have our VFS, Volvo Group culture, but really a pocket of culture in the portfolio. Man, it's been tough times the last three years. There is never a dull moment, and I joke around, and we smile, we laugh, and we keep it as light as we can because you get off a really tough call with a customer who's having a failure, and it's just like, Whew, I got to take a step away. But you have a teammate right there by your side, or a team leader, or a manager, or somebody that's right there with you that says, Hey, are you good?
Mark:Do you want to talk, or you just need a minute? Take a step away. Take a break. Those type of things, that matters. I think while that's been a huge challenge to navigate through this cycle, it's an opportunity to build an even stronger team culture, which I feel like we've done, and has led to a team that performs at a very high level.
Mark:Frankly, people look forward to coming into work. I don't know that that happens everywhere in a collection space, in a repossession space, in a remarketing space. I feel like we're pretty privileged to have that. I'm fortunate and truly blessed to have the people that I'm here with that support me in a great way, so.
Andrew:Oh, yeah. I mean, you have an outstanding team, and it's hard to emulate what you guys have built and the culture that you guys have, but you said it. When you're hearing and working and talking through, listening to all these struggles that customers are having, that can take a toll an individual, and I think you kind of have to try to separate. It's nothing personal. It's not you, it's just the seat or the role, and it's being more empathetic, right?
Mark:Yeah.
Andrew:But yeah, no, you guys have a great team, and I love the titles as far as an account resolution. It's a positive. It's got a positive effect as opposed to saying collections, especially collections has a negative connectivity to it, right? So I love how you guys flip it to something more positive like, Hey, we're going to Account resolution, we're going to resolve this, right? It immediately says that we're going to turn this from a negative to a positive and resolve this the best way that it's a win win for both of us, right?
Mark:Yeah. It's one of those things, it kind of a bit sets the tone, but also if then you're not actually doing anything to resolve those, the title for a role is one thing, and it's really how you communicate and how you follow-up with that customer how you do business and how we interact as a team is really important. And I didn't touch on this, but one other thing in that downturn prep I wanted to just circle back to is vendor management. That was huge. You know how I feel about our relationship with ACS, and I can't thank you guys enough for what you do to support us.
Mark:We do have other vendors that we use for some of the same services, as you know, I think that's really important that I do want to highlight, that vendor management, having those discussions, talking about, Hey, what does your capacity look like? Us understanding what does ACS and some of our other vendors, do you have capacity to take on more if the repos are going up, if there are more collection opportunities that we might be leveraging? What does that look like? Having those discussions, that true vendor relationship is critical and was crucial for us as we had some relatively large fleets naturally fail, as everybody has over the last few years. Being able to coordinate that and still upholding our brand in a good way, that's really important, and has helped us quite a bit.
Andrew:Absolutely, and now we're grateful for the long standing partnership that we've had. I think our relationship goes back twenty, twenty five years, I believe.
Mark:Yep.
Andrew:Back to as long as I've been with ACS, think we brought Bovo on shortly after I started. But no, it's important. You can't put all your eggs in one basket. You can't rely on just one service provider. You have to have multiple options, and there are some great ones out there too, and it's good for a lot of reasons, right?
Andrew:It keeps everybody on their toes, right? There's somebody out there that wants to earn more of your business, so it's good for competitive reasons. It's easy to get to the top, it's hard staying there. But yeah, you can't just rely on one company to do everything for you. You to have a few different companies that you can rely on as well.
Andrew:So what are you seeing, or where are you seeing signs of stabilization or normalization as we head into the middle of 2026?
Mark:Yeah, great question. So I touched on it a little bit already. One of the things that we've been fortunate, and I say fortunate because we do have quite the diversified portfolio at VFS supporting the construction space, supporting the vocational side. So our vocational and construction sides have performed quite well through the downturn, the freight recession, which has helped us maintain some stability. We still have a healthy portfolio.
Mark:We still have some customers that really aren't feeling any of that pressure and stress, like the over the road, versus if we were 100% over the road, that would take it to the next level of probably stress. Now, to touch on stabilization, it really is that over the road trucking. We have seen some of it, and with spot rates, contract rates rebounding in January, in February, and continuing into early March, we are seeing that that is helping. Frankly, some customers that we thought we had exhausted all efforts on and already given them maybe some payment relief and workout and arrangements and stuff, and it really We didn't know that they were going to make it or didn't think that they would make it, have now gotten a little bit back. They've gotten back on their feet.
Mark:They're starting to replenish some of their cash reserves. Their liquidity is getting a little bit better. Their cash flow is a little bit better. We're seeing some of that. Again, I don't want to jinx anything.
Mark:I definitely don't have the crystal ball, but seeing that is encouraging. We know there's so much volatility in the market right now between geopolitical things, and then there's also a lot of things that impact directly the transportation space and over the road trucking, but seeing that stabilization has been very, very welcomed. I'll just put it that way. Is it perfect today? No.
Mark:But is it stabilizing? We are seeing that, yes, and we're hopeful that it continues, because really, I think most predictions, even as we were going into late 'twenty five and the first month or two of 'twenty six, we're saying really it's going to be like Q3 is when we start to see some relief. We're feeling a little bit of that now, but again, that can dynamically shift quite quickly. So again, we're prepped for anything. The team does a great job of being able to adjust on the fly, but having those fundamentals in place to know that we'll be okay either way, and we'll try to navigate through with our customers either way.
Mark:But yes, very welcomed to see some of these over the road, especially these medium sized, decent sized fleets getting some stabilization in their day to day operations in month to month is encouraging.
Andrew:For sure, and I remember speaking with you in the fall, and you had, when I was asking for about your outlook in 2026, you mentioned '6 is, so your prediction is almost spot on. So what lessons from this period will stay with you as long term operational best practices?
Mark:Yeah, fantastic question. I think the downturn prep, every second that we spent on that, we got great return on investment when it comes to that pre downturn preparedness, because was it perfect? Did we have everything figured out? Could we have planned for three, three and a half, four plus years of transportation downturn? No.
Mark:But were we much more prepared and were we agile enough? And again, this is as a large global company where we can't just shift everything on the fly. It takes time and very intentional efforts to shift the way that we do things. And not that we're changing on the fly all the time, we stay true to our fundamentals, but understanding that, well, in 2022, if a customer was past due, again, it was probably because they were failing as a business, and they just weren't doing 'twenty one into 'twenty two, versus in 'twenty four, 'twenty five, and even early 'twenty six, there's probably more just industry constraints and bigger picture constraints on them, even if they are doing things the right way. Understanding that, being able to adjust to the team, maybe giving a little bit more flexibility, intentionally carrying a little bit more delinquency than maybe we were back in 'twenty one and 'twenty two, without just this hard line, fast rule that, Oh, at day X, we move to this.
Mark:At day X, we move to that. It's really easy in the automation world that we live in now in AI. I think it's a great tool, and I may be jumping the gun here if you have any questions about that, but it's something where we use the tools that we have, and some of those can be very helpful, but still understanding that it's the people that make the difference, and leveraging those tools, and understanding that, Okay, well, we can't just be cookie cutter everywhere across the board. We do need to be intentional and be efficient. We can't spend twenty, thirty, forty hours every week on one specific customer, because then we are disservicing our other customers, we're not able to do that, and portfolio performance won't hold, right?
Mark:But again, it comes back to that balance, and when you have a team who care about each other and care about the work they're doing and care about their end customers, that's where we kind of move that needle and see the success.
Andrew:Thank you. You've described a lot of complexity and uncertainty in the market. Navigating all of that requires a strong team, and I know you've touched on it a little bit earlier in our discussion. You've built a reputation for developing high performance groups, even in high pressure situations. So let's shift into your team and the leadership side of your work.
Andrew:So in high stress environments like risk recovery, what does psychological safety actually look like in practice?
Mark:What's great is, right as you're getting ready to ask that question, I said, I'm going to bring up the fact that we talked about and focused on psychological safety. So perfect, perfect. And for anybody watching, we did not plan that, but that was the perfect handoff, so thank you for that. So about two and a half years ago, we actually did So we have a Volvo Group University. They do curriculum, they do training courses.
Mark:There's a lot of great opportunities for Volvo employees across the board to be able to go through. I've benefited from going through several trainings, whether it be leadership training, whether it be training about the industry, the actual products that we have out there from a technical standpoint to be able to understand that at a deeper level. There's a great opportunity through our Volvo Group University that we're very fortunate to have. Again, count my blessings with the opportunities that we have here. Went through a development program myself, a nine month development program with Volvo Group University, to learn more about my leadership journey and how that went.
Mark:But when it comes to psychological safety, we actually had a great, great opportunity to take our full account resolution and repo team in. So there was about 18 of us that went in through this course. Our leadership team, everybody there, full transparency. We went through some training. It was almost a full day.
Mark:First off was kind of like some training, some high level, more theory, and then it was, Okay, what does this actually look like in your team? Okay, we think of ourselves as a high performing team. Let's prove it. Let's talk about some of the things that we've gone through, making sure that And we realize, Oh, without being Psychological safety's been coming into more prominence in the last two, two and a half years or so, it's one thing to say, Oh yeah, we create a psychologically safe environment for our team. It's another thing to actually hash that out and have that discussion with a formalized trained professional that's delivering this curriculum, followed up by immediate discussion, directed discussion between the groups.
Mark:To me, that was a really cool experience, and realized, Okay, I thought of our team as, yes, we try to create them very intentional about making sure that it's not just a, Oh, everybody's happy and everybody's best friends. That's not what psychological safety's about. It's about being able to raise issues. If somebody sees something and says, Hey, I don't agree with this, or, This feels wrong, or, I'm seeing this, they can bring it up and we talk about it and we figure it out. As a leadership team, that we listen to that and act on it, and that everybody's held accountable, leadership included.
Mark:We hold ourselves accountable to that degree, and then we hash things out, we talk through things. It's amazing that we had that opportunity, but also that I think we were even further along in that psychological safety progress, and more mature as a group than I even thought we might be. Was really telling when we went through that, and it was really encouraging. Then it's continuing to follow-up. It's not just a one time training.
Mark:It's practice what you preach and what you've learned. So we talk about things, every team meeting that we have, every group discussion, we talk about the important things that are going on, not just, Oh, here's what we want to talk about, because it's the nice stuff to talk about. It's like we talk about the issues and things that need to be addressed, and performing, and efficiency, and just to keep going down a little bit into the rabbit hole, we have what's called VPS here, Volvo Performance Systems. So we actually talk about process improvements. We go through and we actually have the team implement things from their own day to day things.
Mark:It might just be a small win here that saves them five minutes. Well, if you keep that to yourself, great, that saved you five minutes, maybe once a week. You share that with 16 people, all of a sudden you have a multiplier effect. So encouraging that, making sure that we're performing it in a good way. Yes, KPIs are very important.
Mark:We measure those, we track those, we have dialogues one on ones with those with our team leaders, our managers, myself with the team, but also the bigger picture is, Hey, are we doing the right things for the right reasons? And if we're not, let's talk about it and figure out how we can adjust to make sure that everybody feels psychologically safe, that they're going into their day, that they have a place that they can look forward to coming in, even if it is tough work. Collections repo, it's tough work, but they genuinely I feel good that any of them that were on this podcast right now, or hopefully when they listen in after the fact, truly believe that it is a safe place to go to, and that they have support, and that their team members, and their team leaders, and leadership have their back. It's important.
Andrew:Sure. I mean, it's what's the purpose, right? What is it that they're trying to accomplish? It's preserving relationships. It's preventing from having to recover something and potentially taking a significant loss.
Andrew:It's really like, what's the purpose, right?
Mark:It's tell all I'm a bit passionate about it, right? Yeah. So, yeah.
Andrew:Right, 100%. So you've experienced flexing staff across departments. What does that process look like, and what makes it work?
Mark:Yeah, it's not always super easy, right? And it's okay if it's not perfect, if it's not seamless. The first time or two you do it, frankly, it feels a little uncomfortable. It's like, Okay, how do we fit the right skill sets? How do we actually logistically go about this?
Mark:Oh, having just simple things like them having the right access, them having the right skillset to be able to do that. But I think the bigger thing, again, comes down to people, not just, Oh, one VP talking to another VP, or one director talking to another director and saying, Yeah, we're going to do this and shift it. And nobody actually has a conversation with the person to make sure that, yes, you have to make strategic business decisions sometimes at a higher level that get passed down, sure. But when you actually have those dialogues and make sure that the person that's going to be going into it, the team that's going to be receiving that person or those people, everybody's kind of on the same page. I think that communication is key.
Mark:I've seen instances where that's not necessarily done, and it kind of makes things a little choppy, and you're not able to get that person in and have them being able to deliver in an effective way as quickly. Whereas if you have that upfront conversation, Hey, we do need to shift this, or maybe you're deciding between a few different people, and, Hey, we'd be okay from a leadership standpoint of bringing any of these two of five people over to this group. Let's have the conversation, see who actually wants that challenge. My thing is I should know for each of my team members what they want to continue to develop in their skillset, what they want to achieve today, tomorrow, next year, in five years, if they're happy where they're at and they want to continue that through when they retire. I should know those things.
Mark:My managers, my team leaders should know those things about their teammates, about their team members, because then they know, Hey, yeah, they are ready for their next challenge. Oh, they do have interest in this other area. Hey, if there's an opportunity for a short term assignment or just a temporary assignment over here, let's make sure we flag this person's name to say, Hey, they have a skill set, they have an interest in it. Let's get them over there, they can help there. So I kind of challenge everybody around Volvo and anywhere in the industry just to have those conversations, If you're leading people, you should know what they desire in their career, what they're looking for.
Mark:Sometimes it's okay if they don't want to be in that role, and I encourage people to say, Hey, if you're ready for your next opportunity and you want to go on and do something else, or you're unhappy in this role, let's talk about it. Let's figure out how we can get you ready for that next step or another area, and preferably in the Volvo Group or in VFS. But even for me, it's bigger. It's about the person, and it's about the people, and making sure that it makes sense for them. If it is external, of course, I don't want people to leave Volvo.
Mark:If they're here, I take great pride in developing our talent. But it's understanding and understanding too when it's the right time for people. When it comes to that downturn prep and shifting people in different areas, I think that needs to be an important consideration for it, not just an executive level decision that somebody's just told, Hey, tomorrow you're going here. Oh, next week you're going there. Sure, that does need to happen in some cases, but I think that communication piece can make it a whole lot smoother for the receiving team and manager of that area, plus that person or people that are going to be shifting.
Andrew:Thank you. So leadership inside the organization is one side of the equation, but strong vendor partnerships are equally critical, especially during downturns. So let's wrap up with how you think about vendor relationships and operational excellence. So what role do vendors and external partners play in managing portfolio stress during challenging market cycles?
Mark:Fantastic question again. I think one of the things I've touched on a little bit in some of the prior questions, but I think one of the most important things are, as we stress look at our vendors, and we look at vendor management, and who we want to partner with, and who we want to grow the relationship with that we may already have a vendor relationship with historically, but we want to take that to the next level with other offerings and things like that, I think the biggest factor that comes in is trust. I need to have trust and my team needs to have trust in our vendor, but also our vendor needs to trust us that we're not going to put them in a position to fail. That I'm not going to say, Hey, Andrew, I'm giving you these 10 things, and if the team doesn't deliver on these, and X, Y, and Z, and there's no expectations already set, understanding that your agreements that are in place, that whatever, depending on different areas of the business, the pricing structure, things like that, that those are communicated, that it's not just a surprise to somebody, that you work through those things, that you continue those relationships, that you have those calls where it's not just, Oh, a problem happened, and that's why we're on the phone together.
Mark:Having those proactive conversations about, Well, how's general performance going? How are you guys doing? How is the team doing? Have you prepped for, Well, if we get 500 more assets that are going to be coming through tomorrow, how do you handle that? Those type of proactive conversations.
Mark:There's been some great things that ACS and DFS have been able to partner on, of some proactive approaches. I won't go too far into the details on that, and with some of our other vendors and other areas as well, whether it be repo vendors, collections obviously as well, or on the remarketing side, it's not just me having those conversations, it's some of our other leadership team being involved in those and understanding the relationship. So as we pick those vendors, whether it be a new vendor or just, again, furthering that relationship, to me it comes down to that trust and communication. Performance plays a big factor too, right? Having those open dialogues, if somebody is not performing, yeah, you need to address it.
Mark:But also, maybe I'm an outlier here in the market, but if I have a vendor that's performing, I'm going to let them know that. Not to say, Hey, you're doing a great job. You can relax now and just kick up the feet. Because I have that trust that when I give that positive feedback, it's going to be taken away, Hey, let's continue to do this because we're going to gain more trust and get more business from Volvo, from VFS. To me, that's pretty critical to highlight the wins as well.
Mark:ACS and some of our other vendor partners have been a true partner through some of the downturn cycle that we've talked about in the transportation space. We cannot do this alone. I think very highly of our team, I've spoken very highly about our team, without strong partners like ACS and several others, we do not deliver the results that we are delivering today. It just simply doesn't happen, And our stakeholders at Volvo suffer as a result of that if we don't have those vendor relationships. So I challenge the status quo of just saying, Yeah, we have vendor talks when something comes up or has a problem.
Mark:To me, that's not really good enough. You need to be having the conversations regularly, and nobody has the time to have, Oh, let's have a two hour call every single day. You don't have time for that, Andrew. Your team doesn't have time for that, nor do I, but taking that time to be intentional about those calls, that relationship building, I think goes a long way, especially when you do have something that's a bit unexpected or there's a big market shift. Well, you can go on the fly if you have strong vendors and strong vendor partnerships.
Andrew:Agreed. I think you want to have those either monthly, quarterly touchpoint calls, just to maintain that level of transparency, so you understand what the capabilities are from either a vendor service provider to even on the client side. But as a good service provider, you just want to compliment the existing team that the clients already have in place, and just be an extension of that team, and just be there to support them in whatever they need, and that's really what it really boils down to. VFS, you guys have adopted process improvement approaches like BPS, Six Sigma, and Lean. How have those methods improved scalability or consistency?
Mark:Yeah. No, another good question. I'd say we've had some small wins across the board, whether it be in account resolution, just in terms of We have actually brought in some automation, but not in the true AI sense. It's targeted automation, right? It was actually brought forth by people on the team that said, Hey, our very early term collection attempts, there's some customers we reach out to, and as soon as we contact them one time, whether via email or phone call, they immediately pay.
Mark:It's like, okay, well, to me that's an opportunity to say, Well, if we can get a touchpoint out there that we didn't have historically up until a few years ago of saying, Hey, we just get a touchpoint out there through an automated email, That was something that is scalable. You can do that for the entire portfolio as a courtesy notice, or you can be targeted with certain select profiles, segments, if you will, or areas of the business. So there's a lot of opportunity there. We've had some good wins with that. Taking it a step further, when it comes to on the repo side, we've had some really good Again, it's targeted automation.
Mark:Telematics is a very touchy subject when it comes to personal data. Obviously, you're not there to track individuals or drivers, it's for the assets that are at risk, in our case, a repo or legal status, to make sure that we can locate and find those assets when needed. If you're having a team member or multiple team members pull manual telematics every time we need telematics pulls, there was a huge opportunity there. We We worked with our global team, some of our data visualization team, and then we built that in with some very targeted telematics tracking for a Power BI dashboard. We leverage Power BI quite a bit here at Volvo, so we got some efficiency from there.
Mark:And then taking it the next step further is sharing that with our vendors. So ACS receives telematics from us that are very targeted only for the assets, because that's what we have the use case for and legal clearance on. So you have to be intentional about that. You can't just be when it comes to those kind of things like a telematics or any automation, you have to be pretty mindful of what are the real impacts, not just from a legal, but policy standpoint impacting our customers and our dealerships and us internally. But that's something else that we've been able to share that targeted telematics with ACS and other vendors specific to their portfolios so that we have a higher success rate.
Mark:That takes out people from having to just manually pull telematics all day, every day. When you think about it, is that a value add for somebody to just sit there and do telematics pulls? Yeah, on occasion it's good for somebody to go in and do that, especially if you have a very hot lead on something that you're trying to secure, and you know that it's time critical because the unit's at jeopardy. Great. But in other scenarios, is it really rewarding to somebody to sit there for eight, nine, ten hours a day and be clicking through telematics, taking screenshots, and sharing it over?
Mark:Probably not. There was a better way to do it. We implemented that, and that was a huge win for us. Those are just a few examples. We've had some on the remarketing side with just some, again, Power Automate being able to flow through.
Mark:It's not six emails going back and forth for approvals. It comes up directly through Microsoft Teams, and still with all the same information, but it's not as much of a manual type in process, emails going back and forth. Oh, one got lost in translation. Nope, it's documented. It's saved.
Mark:So we use a lot of tools like that, and it just makes us better. It's not to eliminate people's roles. It's really to make us more efficient and give people work that matters. And the team, fortunately or unfortunately, there's been plenty of job security in the portfolio management space for the last three or four years and beyond because of where our market's been, but even beyond that, in the future, we're very intentional at Volvo about not bringing on several people and then having to turn around and do any layoffs or anything like that. We're very intentional about that from a staffing standpoint.
Mark:Getting a little bit off topic here, but just to kind of bring it back to the process improvements, there's been some huge wins where it allows people to do the things that matter. Have those discussions that I was talking about before, Take that extra five to ten minutes that you saved from one of the email automations going to a customer that all they needed was really a prompt, a reminder that they have their invoice already, and take that five minutes that you would have spent calling or emailing that customer, and spend it to have a little bit further of a conversation to understand where that customer that's failing right now or struggling right now, how do we get them over to the other side? And that's where that efficiency gain, it leads to better results, because not just the time savings, but then where can you take that time and put it into something that matters? You end up finding out that the team buys in more to that, because they're actually valued, their time that they're spending is more targeted with things they want to do, or more important to them and to the bigger picture group.
Andrew:Thank you for sharing that. There's certainly a lot there to unpack. Long answer, sorry. That's okay. That's okay.
Andrew:No, there's a lot of information there for our listeners to get some nuggets out of there. So lastly, how do you evaluate whether a vendor is a tactical resource or a long term strategic partner?
Mark:Yeah, good question. Now, I will be candid with you. I genuinely, when I'm looking at a new vendor or a vendor that we have, my evaluation is usually targeted to say, How do we make this a long term partner? If they're not already, and really that deeper dive. So we tend to go more of that direction, because if we're going to bring a vendor on, it needs to be intentional.
Mark:The other approach can work, sometimes it's necessary, right, if you have a new need that you didn't know you would have or a shift in Dynamics. But to me, if we're doing vendor management the right way, our vendors are prepared for those shifts. ACS is prepared when we do have a shift in the market, or we have an outlier situation that we haven't maybe had before, or a little bit of a shift from what our norm is, that you all are prepared. We've already had those discussions, so we tend to focus on that development there. As I'm looking at new partners or anything like that in any of our spaces that I support, or even across the business, it usually is pretty intentional at Volvo.
Mark:We typically And maybe part of that is the onboarding process, by design, is pretty in-depth from a data security standpoint, from a deep dive standpoint, etcetera. There's a lot of security breaches that take place out there in the world we live in today. So our data security team and legal team spend a lot of time there. So we don't just onboard just to onboard for a quick use turn, and then, Oh, hey, we're going on to the next vendor or anything like that. Certain projects and things may call for a more targeted approach like that, where you're really intentional about bringing them on for one purpose.
Mark:But to me, we do focus more on the strategic side. Now, how do we do that? We talk about performance. We talk about conversations that you and I have had historically, and now I know a lot of times it's Martha Ross having on our team, but shout out to Martha. She's fantastic.
Mark:The whole team is great here, but she definitely helps with a lot of our vendor management and many other things in the portfolio. Maybe it's Tom on your side and the team working through some of these things, but talking about what realistically What's the capacity? Do you have more capacity? Or are you guys pretty much full tight on understanding that, whether it be repo, whether it be collections, whether it be with our remarketing vendors? All those things to me matter, and if you're prepping the right way, talking about performance, talking about capacity, talking about skill sets, for me, I have to understand, and our team has to understand, well, we might have to be kind of targeted with certain placements, whether, again, it be collections, repo, remarketing, or other areas of business that I don't maybe directly support at this point.
Mark:You have to understand your vendor's strengths and maybe some areas where, Hey, that probably isn't their bread and butter. Maybe we can give them an opportunity in that space and see, but we talk about how do they get better in that area. I think having those discussions and being pretty transparent when something isn't working the right way, but also highlighting, Hey, we know that this is our vendor that is the absolute best at doing X, Y, and Z. We know that for this special handling situation, to uphold the Volvo brand and to make sure that we do things by the book with this, because we know that there could be a lawsuit that could come down the road, and not to put any vendor in a bad situation, but you kind of have to know which vendors can do what, and maybe where some limitations are. And if there are limitations, then I kind of challenge people from a lender or the actual finance company side to have those discussions.
Mark:It might be a little uncomfortable at first, but having those honest discussions and see where you can go with it, and make sure that you know who you can rely on for what is an important part of the equation, for us at least.
Andrew:Thank you. Thank you so much. Mark, this has been a fantastic conversation. Your insights into the captive finance model, the market cycles your team has navigated, and your approach to leadership and operational excellence provide tremendous value to our audience. Before we wrap up completely, is there anything else you'd like to share with our listeners, or any final thoughts you want to leave them with today?
Mark:Yeah, I mean, I would just say that I've enjoyed the discussion as well, Andrew. It's been great questions, and we always have good dialogues, whether we're talking about things that are going on in the portfolio or life in general as we're developing our relationship between VFS and ACS. Guess one thing I'll just leave everybody with is that when it comes down to it, and there's a lot that we covered today, the industry cycles, the downturn preparedness, vendor management, all of these things, they're all very, very critical. At the end of the day, if you care about your teams and your teams care about each other, you're going to have so much more results. It may sound a little bit cliche, but I can't emphasize enough that taking that time to work with your people, your team, have those discussions, make sure you know what's going on in their life to the degree that you can help support them in the right way, and give them the grace that they may need on a certain day or week, or if they're going through anything, and just be there for them.
Mark:That's something that I'll just leave, is that that matters more than I can even say.
Andrew:Is great advice. Thank you for sharing that. Now, I'd like to end each episode with a fun question. Since you're from Syracuse and an avid Buffalo Bills fan, here's one that I think feels right. Okay.
Andrew:So is Josh Allen already the best Buffalo Bill of all time? Oh.
Mark:Oh, I might upset some people with this, and maybe I'm showing my age. Some would probably argue that. For the record, I was alive during the four Bills Super Bowl runs. I old enough in the time to understand them? No.
Mark:But have I gone back and watched those VHSs multiple times? I a bit of a toddler when we were making a run back in the early nineties. So I'm putting all that. I've watched and rewatched. Of course, we know the four falls of Buffalo, the 30 for 30 special is painful for a lot of us, but seeing what I've seen over the last thirty, thirty five years, I'm going to go ahead and say Josh Allen already is the best Buffalo Bill of all time, and that is a loaded thing to say.
Mark:Wow. You might be able to convince me that I maybe overstepped there. I think he has to do more in the rest of his career, and maybe I should say that he's on the trajectory to be that, but I think what he's already done, when you look at the excitement of Bills fans, just when you have discussions, what the team has done over the last I we I say we. I mean, me just saying we. I didn't used to say that about the Buffalo Bills, but with Josh Allen there, I say we.
Mark:I feel invested in that team, and being a former athlete myself, I feel very connected to that team. I think Josh is just he's the right guy, and he's a great fit. Won the MVP, has led the team. You see the leadership side of him really flourishing now. He's putting excitement in.
Mark:I mean, we talk about the new stadium that's coming out this year. All those things probably don't happen or probably don't happen to the degree that they do without Josh Allen. Think he's a franchise changing quarterback, and man, if he obviously To me, it doesn't even become that much of a debate if he delivers a Super Bowl championship. If we get a Super Bowl, then to me, he's at that level that I would struggle to hear any other argument, but I'll stop there. I'm curious what your thoughts are because I know that's kind of a loaded thing to say that Josh already is, but I think I'm right about there.
Andrew:Well, I'll say, I love your take on that, and I will agree. I think his impact on the team, in my opinion, has been greater than any former player. The new state Had he not been here, that we're probably now talking about a new stadium. There's a lot of the ripple effect. He's created a whole new generation of Bills fans from all over the country, and even the globe, because of his likability, and the fact that he was kind of a walk on almost at Wyoming, and the only team that really gave him a scholarship offer coming out of junior college.
Andrew:So I would agree with you to that degree, but I was a young teenager during those '90s runs, and lived through the suffering of four straight Super Bowl losses, and the bickering bills even before that in the late '80s. Kelly not wanting to come here originally. Right now, I would say, I think the conversation, consider me old school, I think it's Bruce Smith or O. J. Simpson.
Andrew:Yeah. They both completed their careers, and the full body of work is there. Josh is obviously still in his prime with another, let's fingers crossed, seven to ten years ahead of him.
Mark:We can hope, right? Yeah.
Andrew:Yeah. I mean, I think if he stays healthy and continues on his trajectory, I really do believe he'll end up as the greatest Bill of all time. That's my take. Think Bruce-
Mark:Bruce and OJS. I mean, yeah. I want to argue with you, but it's hard to do that because that's I mean, Bruce Smith and OJ, legends.
Andrew:Yeah. It would have been nice to see Bruce finish his career here. It kind of pained me to see him get the record with, I think, Washington. Washington, yeah. But yeah, the impact he made, the teams had the game plan, was a difference maker on defense.
Andrew:I don't think we'd get the four straight had he not been, you know, the anchor of that defense, and obviously OJ, you know, what he did in a 14 game season versus what these guys are doing in 17 games, incredible. I get it, it was more running, offenses were more around running the football back in those days, and I never seen them play, but just, yeah. So those would be my two, but I guess if we had a mouth rocker-
Mark:I mean, I think all three of them are up Yeah. There, I don't
Andrew:think there's a wrong answer, right?
Mark:Oh,
Andrew:man, if there was need to go watch some Bruce
Mark:Smith highlights after this. I'll see when my next call is, and I think I might go watch some Bruce Smith highlights and OJ. But yeah.
Andrew:Just I think the only thing you really need to watch is that Dennis Hopper Nike commercial, you know, with Bruce Smith is bad things. Right? Yeah. Yep. I don't know if you've ever seen it, but
Mark:I have. I have. It's been it's It's been a little while, so I'll go watch that too.
Andrew:Well, Mark, thank you again for joining us and sharing your perspective. I've had a lot of fun doing this with you, and we've had a great friendship and great partnership over the years, and seeing all the great things you're doing with Volvo and your team, it's been great to watch as being here from Buffalo. And to our listeners, thank you for turning into another episode of ACS Portfolio Perspective. Be sure to subscribe so you never miss future conversations with leaders across the equipment finance and recovery industry. We look forward to having you with us next time.
Andrew:Thank you.