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.
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Equipment Financing Requirements
A customer equipment financing program, or vendor financing program as it can also be referred to, provides your customers with immediate assess to equipment financing and/or equipment leasing programs that are capable of providing financing for the type or types of equipment you sell as well as the type or types of financial and credit profiles of your typical customer.
Basically, your business and offering has been reviewed and qualified by one or more lenders who would be interested in receiving applications from your customers.
Without a customer equipment financing program in place, lenders or leasing companies are basically entertaining one off applications which will each have to go through the process of validating your credentials as a dealer or reseller, how long you’ve been in business and your track record with your customers, as well as your financial position.
You may wonder why any of your information is important to the process.
Because the equipment financing process is going to be relying on the equipment as the primary security, the lender or leasing company will want to know that the supplier of same provides quality equipment and service and will be around for the foreseeable future to service the customer and potentially the equipment.
This becomes even more important for any equipment items that are not pure commodities in the market place where the resale market is not well defined or yet developed.
In order to strengthen a customer financing program, the dealer or reseller may also provide potential lenders with a form or recourse where by they will re market or repurchase the assets financed in the event of default. This type of scenario is not typically a requirement of a customer equipment financing program, but it does reduce the risk of the lender and therefore increases their potential to grant a financing approval in favor of your customer.
The other thing to keep in mind is that each and every customer must qualify with respect to their own credit and financing resources. Just because a lender or leasing company is ok with the equipment being sold the seller still does not guarantee by any stretch that financing will be provided.
The reason for going through the process of getting a vendor financing program in place is to simplify the financing process as much as possible so 1) a positive lending or leasing decision is more likely, and 2) the process is completed as fast as possible so as to reduce the risk of the sale not closing due to delays in the processing of a equipment financing application.
If you would like to get a customer equipment financing program set up for you business, or want a review of the one you already have, we suggest that you give us a call so we can go over your business model and customer profile and provide relevant vendor financing options for your consideration.
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