Explosive Growth in aaS Financing: Mitsubishi HC Capital America Takes the Lead

Assignment financing, representing nearly 75% of Mitsubishi HC Capital America’s division portfolio, is making waves due to the soaring demand for aaS models from OEMs.

Minneapolis, MN - A breakthrough is happening at Mitsubishi HC Capital America. As the leading non-bank, non-captive finance provider in North America with a whopping $7.5 billion in owned and managed assets, the company is experiencing unprecedented growth through its assignment financing programs.

So, what's assignment financing? It's a scheme that enables an Original Equipment Manufacturer (OEM), manufacturer, reseller, or vendor to receive a cash payment upfront for their customer’s as-a-service (aaS) contracts. Remarkably, under the capable hands of Jim Teal, the Senior Vice President of Healthcare, Technology & Franchise, the new assignment financing programs have surged, doubling their numbers since 2020. In fact, nearly 75% of the division's portfolio now leans towards assignment financing, reflecting the escalating demand for aaS models. The aaS market ballooned to $559 billion last year and is set to explode from almost $700 billion in 2023 to a mind-boggling $3,221 billion by 2030, according to Fortune Business Insights. The main force behind this anticipated growth? Investments in digital transformation initiatives aimed at boosting business agility and operational efficiencies.

As Mitsubishi HC Capital America continues to stretch its wings in offering this funding solution, it's meeting the evolving needs of customers, especially within the tech and robotics/automation sectors, says Teal. "These firms aren't just falling back on traditional funding routes. They're actively scouting for novel alternatives to fuel smart growth." What's more, Teal highlights that these companies can maintain their sales model and business operations while enjoying immediate liquidity. A win-win indeed!
The firm’s $200+ million assignment services financing deal

To illustrate, Mitsubishi HC Capital America has been the go-to private-label financing choice for a medical automation equipment manufacturer for over 15 years, for its automation-as-a-service (AaaS) subscription contracts. The firm's financing of the OEM’s contracts for its comprehensive AaaS solution — comprising equipment, software, supplies, and services — has crossed the $200 million mark, with more to come. This financial structuring helps convert contract payment streams into an immediate cash source for the OEM's AaaS contracts.

Teal points out two key benefits for an OEM through this structure. Firstly, it gives the OEM access to funds that can be used instantly for other business needs, instead of waiting for months or even years. Secondly, Mitsubishi HC Capital America’s private-label financing lifts the financial management burden off the OEM, ensuring a smooth, single touchpoint for customers.
Taking the capital burden off the table

"As-as-service offerings have transformed customer purchases across sectors, from software to robotics, so has our approach to financing," Teal exclaimed. By turning as-a-service contracts into cash, they've devised a system that minimizes, or even eliminates, up-front capital requirements. This injects a cash boost, often doing away with the need for firms to source outside funding for business investments.

Teal conveys that while the monetization of as-a-service contracts isn't new, only a handful of lenders, including banks, provide such programs. With rigid lending criteria and a hesitancy to provide innovative, custom solutions in line with market demands, bank customers are exploring alternatives. "Mitsubishi HC Capital America is all about understanding a company's present and future business requirements, then crafting solutions to help them boost market share and cash flow. This approach, along with our core services, is truly meeting the market's wants and needs.”

Mitsubishi HC Capital America, the leading specialty finance company in North America, boasts extensive capabilities throughout the region with its affiliate, Mitsubishi HC Capital Canada. It combines a digital platform and a consultative approach to aid organizations of all sizes in their growth journey. With over $7.5 billion in assets and a strong workforce of over 800 employees, it is the top non-bank, non-captive commercial finance firm in North America. The company provides customized financial solutions to equipment manufacturers, dealers, and distributors, as well as end customers. Committed to contributing to the communities in which it operates, the company aligns its goals with the United Nations Sustainable Development Goals. For more information, visit https://www.mhccna.com/en-us.

Source : industrytoday.com