“We would be out of business without vendor financing” according to the president of a distributor of commercial strength and cardio equipment. Almost 65 percent of this company’s revenues are generated utilizing a vendor financing program implemented over ten years ago.
Vendor financing programs provide manufacturers, distributors and dealers from a wide variety of industries the capability to offer customers a convenient way to acquire their products at the point of sale. A few of the key benefits vendor financing provides include:
· Improved vendor cash flow through pre-funding, or financing of the down payment, and reduced receivables through collection of the balance upon delivery of the product
· Improved margins and higher sales by focusing the customer on monthly payments instead of price reductions
· A faster selling cycle – fewer worries about whether your customer has the money in its capital budget or if they can (or will try to) find financing on their own
· Transfer of the financing risk to a third party through non-recourse programs
· The ability to open up new markets including selling your products outside the United States With programs that can provide financing in amounts as little as $5 thousand, vendor financing can be implemented to cover most asset types and a variety of customer credit profiles including start-ups and early stage companies.
For amounts up to $100 thousand (and higher), many financings can be approved in as little as four hours after your customer completes a one page application. For larger transactions, approvals can be obtained as quickly as two business days following the submission of financial statements and tax returns. Lease terms can extend to 84 months for equipment with long useful lives sold to qualifying credits.
According to a southeastern manufacturer of equipment, the flexibility, creativity and extraordinary support it enjoys through its vendor financing program provides it with a competitive advantage. Its vice president of sales firmly believes that choosing the right programs and leasing company can be the difference in winning a sales competition.
A few questions to ask in selecting the best leasing company for your business include:
· Flexibility – Can the financier fund my A, B & C credits? Can soft costs be included in the financing amount? Will all credits be financed without recourse to the vendor?
· Minimums and maximums – How small and how large of a deal can the financier fund? Any limitations on how much credit it can extend to any given buyer? Any overall minimum or maximum volume requirements to create a program for your company?
· Creativity – How many different programs structures and end user offerings can the financier provide? Will the financier create unique programs to meet the special needs of certain customers?
· Service – What levels of support do you require for sales, marketing, administration and deal structuring? Do your customers require a personal touch or will a highly automated system be a better fit with your sales methods? If you can visualize your company as a one-stop solution provider to your customer’s needs through having the ability to offer fast and easy equipment financing, then vendor financing may provide you with new and profitable opportunities.