So you have a vendor financing program in place, or are thinking of getting on set up to be available to your customers.
In either case, here are some vendor financing mistakes that you should avoid at all costs so they do not create lost sales and reduced profits.
Often vendor programs are marketed very aggressively by leasing companies through their agents to get exclusive or semi exclusive access to the dealer or reseller’s customer financing business.
But many times these programs are a poor match for the financing requirements some or most of your customers that require financing. For instance, if the leasing company only provides equipment financing for “A” credit deals and most of your customers don’t have “A” credit, then its not going to be very effective and will actually irritate the customers as no one likes to get their credit declined which will also take some time to go through and at the conclusion of the process they still can’t complete the sale.
It is critical that a vendor financing program is set up to meet the credit requirements of most of your customers that will require financing or you would likely be better off without it.
Even if the vendor financing program is well suited to your customer credit spectrum, it still can do more harm than good if the equipment financing companies you are working with do not provide exceptional customer service and fast turn around of applications.
Many times, vendor financing programs are administered through a central support desk where your deals may be circulated through the hands of a number of different agents. Without some degree of familiarity with your business and the assets you are selling, the process is likely going to be less responsive than it otherwise could be or should be.
To find out how to tell if the vendor financing program you have in place right now can be improved upon, or to get an assessment of what type of vendor financing program best meets the requirements of your business and your customers, give us a call and we will perform a complete assessment and provide recommendations for your consideration at no charge or obligation to you.
Click Here To Speak With An Equipment Financing Specialist For All Your Vendor Financing Requirements
When it comes to vendor financing programs and how they relate to vendor profitability, it very simple.
The easier it is for a customer to secure the equipment financing they require to purchase equipment from you, the higher the probability that the sale will actually close.
Too many times sales are lost because either the customer can’t locate financing, or they go to another vendor or dealer who can connect them into the dealer’s very own vendor financing program.
At the same time, just having a vendor financing program for your customers is not always going to equate to more sales and profits.
Unfortunately, there are lots of customer financing programs out there that are poorly designed, poorly administered and poorly funded.
There are basically two types of vendor equipment financing programs you can consider:
Lets look at each of these individually.
The financing company direct model is good if you have 1) a highly uniform customer base where everyone’s credit and financial profiles are similar; 2) a fairly narrow range of transactional dollar amounts; and 3) ample time to complete the deal.
You see a financing company direct model only provides their own equipment financing programs. Each financing company tends to be fairly narrow in terms of the type of credit and financing profile they are prepared to consider in addition the amount they are prepared to fund for any given transaction. With this model, you are also working into an administration desk where they could be different people involved on every deal that comes in and some variability in turn around of an application as a result.
If you’re customers fit this type of model, it can provide great value to them.
The broker administered model is more capable of dealing with a broader range of customer types, financing requests, and turnaround time requirements. A well run vendor program through a broker will also tend to provide one main point of contact who is going to be primarily responsible for making sure all the right information is collected in the manner in which the financing company requires it to be.
This is extremely important as each deal that comes in may need to go to a different lender or leasing company, depending on the type of equipment, amount required, the financial profile of the customer.
The strength of this model is the high level of dedicated vendor and customer support as well as the access to a broad range of lending and funding parties that collectively can cover off the needs of your customers.
If you would like more information on vendor financing programs for your business, or would like to see if what you currently have can be improved upon, give us a call and we will make sure you get all your questions answered right away.
Click Here To Speak With An Equipment Financing Specialist For All Your Vendor Financing Program Needs.