Another objection many equipment vendor companies cite when it comes to offering equipment financing is they don’t want the risk involved with financing.
And I agree – that would certainly be a fair argument… if there were any risk involved for them. But 99.9% of the time, there isn’t. Follow me here – these two scenarios have the exact same risk (i.e.; none at all):
Scenario One – Your top salesperson is on the verge of closing a huge deal with a customer. The customer says “I want to do this, but I really don’t have the cash. Let me go to my bank and get a loan and then I’ll come back with the money. Good?”
Scenario Two – Your top salesperson is on the verge of closing a huge deal with a customer. The customer says “I want to do this, but I really don’t have the cash.” To which your salesperson replies “No problem, financing is available – you can get it all for xyz a month. We can even apply online right now, go to lunch (my treat), and we’ll probably have an answer when we get back.”
One more time, the two above scenarios have the EXACT SAME RISK. None. Zero. Zilch.
To the seller, having the customer get the funds on their own (through their bank, their mattress, their great Uncle Ernie, etc), or going through an equipment financing partner is the exact same. The entity providing the funding is at risk for repayment, not the seller. So if the customer goes to the bank and gets the money, the bank took the risk. If the customer went through an equipment financing partner, the equipment financing partner took the risk*.
*To be fair, there is an exception – some vendors want to offer creative financing, like “no payments for a year”, etc. In cases like that, there could be shared risk. But that’s not the norm – most vendors want a simple “payments are available” partnership, and there’s zero risk in that
All partnering with an equipment financing company does is give your customer an easy way to pay. Plus, as some of you may have gleaned from scenarios one and two above, the “bank” option leaves the deal cold for a period of time. The “we have financing available” option closes the deal right then and there. Any salesperson worth their salt knows how powerful that is.
In fact, we’ll talk more about that point next time. But for now, simply take away that there’s no financial risk in offering monthly payments.