Every Vendor Needs a Finance Partner

Every vendor, manufacturer, distributor, dealer or business which sells equipment to another business (B2B sales) can benefit from having an equipment leasing company or finance company as a strategic partner. As a vendor, the goal is to make the purchase of your products as easy as possible; the purchase activity is the last step in the sales cycle after you have spent considerable energy in producing the item, marketing it and targeting the right customers. You want to make that last step as convenient and easy as possible; for the clients which pay cash, everything is great but for the ones which want and need your equipment yet have cash flow which is a little tight you will want to offer a finance alternative.

Some vendors share that they do not want to get into the leasing business nor have their sales reps bogged down with finance details. This is understandable since it is not their core business but a good finance partner would handle all the paperwork details including gathering the right documents, reviewing the credit, offering the terms and executing the finance agreement. The vendor can be prepaid a deposit with the balance paid upon delivery of the machine or they can be prepaid 100% upfront which typically can work for products which have a short delivery cycle. The timing of payment should be very encouraging to distributors since they do not have to wait for the typical NET 30, NET 60 and even longer payment terms which many companies take advantage of these days.

The benefit of getting paid right away has steered many vendors to primarily promoting financing their sales as opposed to waiting for cash. Of course, we still know small businesses which insist on 100% full cash payment upfront but it is with certainty this strategy loses a good portion of potential sales. If they sell a one-of-a-kind item then they might get away with it but for 99% of other B2B companies, it does not work.

Finally, the vendor will want a finance partner with multiple sources of capital. Why not just partner with a local bank? Because a bank will only offer a limited number of products and all of them will be for the “A” category companies which will limit all your other customers which fall into that less-than-perfect credit category. Offering financing will build sales, offering financing with a variety of program options will build even more sales; the goal is to turn down as few customers as possible which want to buy what you sell. Check out: Vendor Program