One thing I noticed in my job as an equipment financing specialist is the fact that people (and businesses) can be very predictable. Time and time again, the same patterns emerge – enough for me to notice and write a blog post about it.
Today I’ll talk about a trend that plays out month after month, quarter after quarter, year after year. And it’s the fact that we always experience a surge of equipment financing / equipment leasing requests at the “end” of certain time periods.
It happens at the end of every month; it happens at the end of every quarter; and it really happens at the end of every year. And they all want to close the transaction by the end of whatever period we’re in (e.g., “I need to close this by tomorrow”).
Over the last year, I made it a point to talk about this with the people doing the financing (more or less for my own curiosity.) But the range of answers I got was interesting.
One of the biggest reasons was budgetary. Many companies (especially larger entities) have budgets that, depending on the company, may be broken up into months / quarters / years. And it’s a “use it or lose it” scenario.
Another driving factor is profits – particularly quarterly profits. Let’s say a company is already having a bad quarter. They decide at the end of the quarter to lease new equipment. This does two things – it puts the transaction on the “bad side” of the break between quarters, but it puts the new (profit enhancing) equipment into the new quarter. In one fell swoop, next quarter is looking better already.
Lastly, I found out equipment salespeople are a driving force in this too. They often have monthly quotas, and don’t realize until the end they are going to fall short. So they get to it and start really selling. Or maybe their company is having a sales contest (a trip to Hawaii), and Joe realizes he can win if he just closes two more deals by tomorrow. Thus, Joe hits the bricks, makes a few calls, and gets three new sales (one more just for good measure.)
And the recipient of all this “end of month / quarter / year” business? Me. They all call me. But despite my great month-end numbers, nobody is offering me a trip to Hawaii (hey, wait a minute!)
Oh, I haven’t even mentioned how this plays out with Section 179. But you know that’ll be coming…