For Vendors

Volumes have been written on the benefits of leasing from the customer's perspective, but little mention is given to why leasing can significantly benefit the vendor. This article will address some of these issues.

Somewhere along the time-line of the sales cycle, hopefully sooner than later, the subject of how the customer is going to pay for the product arises (see selling 101). At this point the customer may offer several responses: “I’m going to my bank.” “Do you offer financing?” “I’m paying cash.” Of course, if the response is the last one, be quiet and take the money (see selling 102)! Either of the other two offer you some unique opportunities, which leads us to the benefits of lease financing to the vendor.

1. If it’s good for the customer, it’s good for you. If you subscribe to the concept of win/win selling, then what is in the customer’s best interest is ultimately in your best interest. There are numerous benefits to leasing from the customer’s prospective – little up front cash, variable lease terms, tax savings, protection against obsolescence, and ease of completing the transaction are but a few.

2. Leasing can help you pre-qualify customers. How many times have you or your sales reps spent months talking to a prospect, doing demonstrations, and wining and dining only to find out the prospect can’t afford the product. If early in the sales cycle you mention the equipment will cost approximately $675 a month, and the prospect rolls his eyes and slumps into a coma, then you immediately know to move on the greener pastures.

3. Leasing helps you sell more equipment. If you’re selling to a business owner, he is always thinking in terms of his monthly “nut.” He doesn’t think of a piece of equipment in terms of costing $25,000 or $30,000, but $562 a month or $675 a month and how much this additional expenditure will save him or add to his monthly revenue. Furthermore, it’s always easier to move a prospect up $113 a month than $5,000. In the corporate environment often you’ll get the objection, “it’s not in the budget.” Virtually every corporation has a policy that provides funding outside the normal capital budget if cost justification can be made. Leasing offers a very painless solution to this predicament.

4. Leasing helps your cash flow. Let’s suppose you sell some equipment to a customer and your normal terms are net 30. First of all, how many times have you been paid exactly on terms? Your receivables could be running 60 days or more. At today’s rates, you could increase your bottom line by 2% (if your customers lease) by not having to borrow against 60-day receivables. Secondly, if you’re like many dealers and VAR’s you can’t pay your vendor until you get paid. Leasing will keep you in good graces with your suppliers, because most leasing firms will pay you within 48 hours of delivery and acceptance.

5. Leasing gives you better control of the selling process. One of the cardinal rules of selling is: Never lose control of the process. Suppose you’ve spent several months cultivating a prospect and he has finally given you one of those cherished—but often elusive – buying signals. You, as a professional salesperson, instantly pick-up on the signal and get his signature on the purchase order. Hooray for you! Many sales people erroneously think they have completed their assignment. Nothing could be further form the truth. The selling m9ission isn’t complete until the check clears the bank. After all this hard work do you really want to relinquish control of the financial portion of the sales process to a banker? If you do, several things can happen and most of are bad.

Selling rule 37: Time delays have cost you more business than all your competitors combined. The bank will want updated business and personal financial statements, regardless of the size of the transaction (delay). The banker most likely will have to take the loan request to a committee for approval (delay). Many leasing companies can approve a leasing transaction in just a few days (hours for small transactions), often without financial statements.

Moreover, the banker may have already extended credit to the customer and may try to dissuade him from making “any further capital expenditures at this time,” whereas the leasing rep is always an advocate of the transaction. The customer will not tell you his bank turned him down; he’ll say, “I’ve changed my mind.”

Business is competitive and tough. If you are the owner, president, or sales manager, you owe it to your salespeople to give them as much selling ammunition as possible. Offering leasing as an option is just another arrow in their quiver of sales tools. And remember, no one ever lost a sale by offering leasing as an option.

Lynnray Financial Corporation is headquartered in Norcross, GA and has over 40 years (combined) experience in structuring lease financing to accommodate the needs of customers just like yours. Please feel free to call us toll free at (800) 535-4138 to discuss our handling of the financing on your next sale.