Vendor Financing is the art of building customer finance programs that help close sales. Not all sales will be closed this way, but all customers will appreciate having another option provided by the supplier. It differentiates the manufacturer or distributor from the pack.
A buying decision will always include answering the question of how will the equipment be paid: Own cash – may have better uses with working capital or opportunistic purchases. Bank lines – probably already used or for other specific purposes. For the seller this looks like a cash purchase. New financing – will need to start the process of finding a new alternative.
A finance program will help the decision maker by avoiding the need to look outside for a new financing option, knowing that it can keep the cash and the existing bank lines intact.
It also provides the benefit of shifting the discussion to what is the correct configuration, size and model. The customer’s thought process has changed from ‘to get the equipment how much capital I need upfront’ to analyzing if the the new equipment can generate enough cash flow for the monthly payment. In this new thought process is easier to accept an increase in the equipment price because the monthly payment increase is not significant.
COMMUNICATION & PROCESS
Clear process so that the seller and customer understand what is needed and when is in terms of documentation and credit process.
Permanent, fluid communication to manage expectations.
Courtesy, respect and professionalism.
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