Wolters Kluwer Compliance Solutions findings from second quarter analysis of its Equipment Lease Finance Digital Transformation Index show a significant increase in digital adoption rates in financing compared to previous quarters. The Index tracks the rate at which equipment lessors and service providers are seeing growth in the evolution from paper-based finance back-office processes to digital. Click here to see the full data report.

According to the Index, the rate of adoption for digital contracting in Q2 increased 34 percent compared with the previous quarter, up noticeably from the 19 percent increase in Q1. The Index jumped 41 percent compared to Q2 2023, also up more than the 28 percent rise in comparing YOY for the first quarter. The moving, four-year trend continues to show digital adoption growth at 30 percent dating back to Q2 of 2020. Q2 2024 results mark the best Index quarter recorded for digital adoption.

“American companies have demonstrated remarkable resilience and a robust appetite for spending and leasing equipment,” said Tim Yalich, Head of Motor Vehicle Strategy for Wolters Kluwer. “This ongoing commitment to growth and innovation underscores the critical need for digital adoption in processing these transactions.

Much of what is driving the trend has been a resilience in business spending over the last few months. It was reported that new orders for manufactured durable goods increased by 0.7 percent in April. Orders increased by $1.9 billion to $284.1 billion during that month, according to the U.S. Census Bureau.

Furthermore, according to The Wall Street Journal, a key category of business spending picked up in the second quarter, which analysts described as a positive signal for future productivity. Nonresidential fixed investment, reflecting spending on commercial construction, equipment and software, rose at a 5.2 percent rate. Capital expenditures were led by 11.6 percent growth in spending on equipment, while spending on structures declined.

The recent data suggests a moderate improvement in business spending on equipment, but that investment continues to be constrained by higher borrowing costs, a strong dollar and weak global demand. Interest rates have lowered demand for goods and raised the cost of financing for businesses. As a result, confidence in the equipment finance market in June remained level at 50.7, compared to the May index of 50.2, as measured by the Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI).

“Embracing digital documentation not only streamlines operations but also enhances efficiency, security, and sustainability,” said Yalich. “As we move forward, the transition to digital solutions will be pivotal in supporting the dynamic needs of businesses, ensuring they remain competitive and agile in a rapidly changing market."