An equipment financing program can be a very critical element to a solid sales process for an equipment reseller or equipment dealer.
The ability to introduce the customer into a relevant source of equipment financing can make or break the deal at times.
Sometimes this is because the customer has a very tight time schedule and requires the financing quickly to secure the equipment and meet that requirement.
Sometimes its because the competitor also offers equipment financing programs and if yours fail to deliver, the competitor is more than happy to step in and save the day.
The first major benefit is completing sales as quickly as possible. Any time a sale has to be delayed for financing, there are a number of things that can happen to the deal and most of them are going to be bad. Not only could you loose the customer to another vendor financing program, but you’re tying up assets that could potentially be sold to someone else.
The financing process can be frustrating to your customers at times, so if you’re making it easy for them another key benefit is customer satisfaction which may not only lead to potential incremental sales in the future, but also some goodwill in the form of word of mouth advertising.
When a well suited equipment financing program is in place, you can also include it in your company promotions providing more sales punch to any of your marketing messages.
The flip side of all the benefits is what happens when you don’t have an equipment financing program in place or a poorly functioning one.
And there are different things that can cause a lack of performance in this regard.
For instance, you could be working directly with a leasing company that does not have the type of turnaround time your sales process requires.
Or the equipment financing program is limited to only one lender that can’t cover off the majority of your requests for financing.
Regardless of the reason, if you’re customer cannot get timely access to credit terms and conditions they are prepared to accept, there may not be a sale, which will impact your inventory turnover and bottom line profit.
If you’d like to inquire about an equipment financing program for your customers or get a second opinion on the one you already have, please give us a call for a free program assessment.
There are basically two types of vendor finance programs that can be set up to provide financing to your customers in order to complete a purchase they are trying to make from you.
A vendor finance program can be set up and run by an equipment financing broker or it can be set up and administered by an individual equipment lender or leasing company.
In both cases, you are connecting the customer directly to the vendor financing program administrator for your equipment line so that an application for financing can be processed and hopefully approved as quickly as possible.
In an equipment financing broker driven model, the broker collects the information from the customer with or without the vendor or dealer’s assistance, puts an application package together that will be submitted to a lender or leasing company best suited to fund the deal, and then manages the process back and forth between the customer and the finance company until it is complete.
With a vendor program run through an individual financing company, instead of a broker administering the process, the work is done by an agent or customer service representative that works for the finance company.
The main difference between the two types of programs is that the financing company led approach can only service and approve applications that meet the lender’s criteria. If you have a customer that applies for credit who does not fall within the credit requirements of that specific lender or leasing company, the customer will be declined and then left to figure out potential financing on their own which could lead them to a different dealer or leave them with no financing option at all. In either case, the deal becomes in jeopardy of being lost.
When the broker model is utilized, the broker may very well be able to send deals to the exact same financing company that internally administers their own vendor program, but in addition, can provide the customer with additional equipment financing choices that may better fit the customer’s credit and financial profile.
With the broker model, your customer is not limited to one financing choice, and at the time of application, the broker is in a position to route the deal to the most likely source of financing versus having an all or none approach with one financing source.
Even if you have a very homogeneous group of customers whose needs could all be serviced with one financing company, you need to make sure that the turnaround time of the finance company and their level of customer service is in keeping with what you internally provide for your customer. Many of the financing companies provide services through an agent desk where there can be considerable variation in service from one day to the next, one agent to another agent.
A broker can still work with one targeted financing company if that provides the best value for your customer, but as an individual broker, they can also potentially provide a higher level of service which can make all the difference between closing a deal or not.