Dental equipment supplier equipment financing can be required for the dental supplier’s own inventory that they are requiring from a manufacturer or another distributor for the purposes of resale, and it can be required by the dental supplier’s customer who wants to purchase equipment from the supplier but will require equipment financing to complete the transaction.
There are different forms of inventory financing available, each with certain attributes with respect to rates and leverage provided.
For instance if a dental supplier has a line of credit through bank to financing inventory, they will have a low cost of financing, but the percentage of the asset value to be financed is going to be very small.
Asset based lenders will provide higher amounts of financing relative to the cost of the supplier’s inventory, but the cost of funds will also be higher in keeping with the higher level of lender risk.
The key to making higher ratio inventory financing cost effective is the amount of times you can turnover your inventory during the course of a year. The more turns, the lower the average cost of financing becomes.
Its also difficult to get dental supplier equipment inventory financing facilities for amounts under $200,000.
The other type of dental supplier equipment financing is financing that is arranged for the customer by a third party financing company that has qualified the dental supplier as a reputable supplier of equipment to this industry.
Being prequalified as a supplier with key equipment financing companies all transactions that are subject to financing to be reviewed and committed quickly, making this a key step in the successful completion of a sale transaction.
When the dental equipment supplier has an established relationship with a third party lender or leasing company, the signed sale transaction can be sent, with the customer’s permissions, directly from the supplier to the equipment financing company so that everything the customer requires to complete the sale can be handled within one process.
By not allowing or requiring the customer to go out and source his or her own source of dental equipment financing, the dental supplier has a much tighter sales process that will be less susceptible to competitive pressures which can discount or even lose the deal for the supplier.
Depending on the dental equipment supplier, both types of financing are going to be important and need to be in place and functioning properly for optimal results.