There is a common misconception in this industry that we hear all the time: “Our customers have a lot of cash so they wouldn’t be interested in financing.” Or “Our products are not at the price point where customers would consider financing.” But the truth is, all companies, no matter how much they have in cash reserves, are in the business of making more money. Making savvy financing investments allows them to do just that. According to the Equipment Leasing and Finance Association (ELFA), nearly 8 in 10 companies in the United States use some form of equipment financing. When we crunch the numbers and show customers the long term benefits from financing versus paying cash, the financing options are often the better solution for the long-term well being of the company. Offering vendor financing to your customers has many benefits for both you and your customers.
Offering financing directly to your customers can hugely benefit them even if they don’t realize it. You may think your customers won’t take advantage of this feature because they have a surplus in their cash reserves. Or maybe you think your products don’t cost enough to be considered for financing. However, that can’t be farther from the truth.
There are many reasons companies with large amounts of cash on hand still choose to finance:
Capital-rich companies finance or lease as part of a smart, diversified financial plan. These companies can maintain large cash reserves (which is attractive to banks and interest rates), stay prepared for unexpected expenses, and invest and plan for the future. So when you have a successful company that is cash solvent and ready to purchase equipment from you, wouldn’t it be great if you were able to offer them financing?
Chances are good that your customers are going to finance the equipment through some institution. By offering financing directly, you’re giving them more than just financing; you’re offering them convenience. And in today’s busy, over scheduled world, that is worth a lot. A better customer experience will greatly increase retention and lead to more business for you.
By providing financing on site, it’s easy to show your customers different pricing scenarios regarding various equipment upgrades. In many cases, when a customer is shown their payment options, they see that the payment for upgrading to a premium model is nearly as affordable as a base model and more likely to upgrade. Your customer gets the best equipment and you get higher sales- a win-win!
According to ELFA, about 30% of all equipment sales are financed by the manufacturer or their finance partner. Experts expect this number to continue rising as customers realize the benefits of vendor financing. Don’t buy into the misconception that successful, capital-rich companies aren’t financing their equipment– because they are! They see the value in it for their business, and you can gain a competitive advantage by partnering with a financing company like KLC Financial to offer your customers great financing and leasing options.
Contact us today if you’d like to further discuss the benefits of vendor financing!
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