Digital contracting in equipment finance grew during the second quarter amid increased financing activity.
Wolters Kluwer’s e-contracting index increased 9.9% year over year in Q2 and financing activity rose 17.7% quarter over quarter as the equipment finance industry recovered after tariff uncertainty slowed first quarter financing, Eric Capehart, associate director of market strategy for Wolters Kluwer’s digital lending solutions, told Equipment Finance News.
“That recovery, paired with the continued growth that we see in the digital adoption space, really signals that institutions are staying the course on their long-term transformation strategies, even amid shifting market dynamics,” he said. “Especially for those who can continue to really focus on the opportunities like e-contracting, they’ll just continue to position themselves for success.”
Digital adoption has grown at an annual rate of 39.8% since Q2 2021.
Financing activity increases
Equipment finance sentiment reached 58.2 in June, rebounding from sharp declines earlier in the year, according to the June Equipment Leasing and Finance Foundation’s (ELFF) Monthly Confidence Index survey released June 16. Meanwhile, 29.6% of executives surveyed by the ELFF said they expect business conditions to improve in the next four months, up from just 4% in May.
Amid uncertainty, increased digital adoption aligns with rising confidence in the equipment lease finance industry, and businesses can no longer afford to delay decisions since success increasingly depends on being proactive, Capehart said.
“We reached a point within the marketplace where you have to make some sort of a decision to move your business forward, whether that is digital adoption or whether that’s continuing with your existing practices,” he said. “Those businesses can’t simply stay stagnant.”
Overall, financing conditions improved over the second quarter as the tariff announcements from the administration of President Donald Trump that were scheduled for the beginning of the quarter continued to be postponed, according to a July 21 Fitch Solutions special report.
“Funding and liquidity conditions were strained following the April tariff announcements but have stabilized as the implementation of [the] steepest tariffs was postponed,” the report stated. “Policy developments and sector-specific risks will remain key drivers of [credit] rating trends through the rest of the year.”
With renewed industry optimism and growing confidence, now is a critical time for institutions that have delayed digital adoption to either begin planning or move into implementation to stay competitive, Capehart said.
“That next step may be implementation because they’ve already been planning through the cycle we’ve been in, or maybe that next step is starting that plan … ,” he said. “Either way, now is a pretty important time to act.”
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