I mentioned earlier that I wanted to start talking about the vendor side of the equipment financing equation. And there’s no better place to begin than to distinguish the difference between “Passive” vs. “Proactive” in terms of equipment financing.
Actually, the terms passive and proactive really don’t pertain to the equipment financing itself – they pertain more to the vendors (manufacturers / distributors / dealers). And the terms aren’t official either – there’s no “passive vendor” entry in the equipment financing dictionary (actually, there’s no equipment financing dictionary, but I digress.)
Ok, here’s what I mean by these two:
A “Passive” vendor in regards to equipment financing is one that does not view equipment financing as a given. Simply put, it’s not expected in their industry. Software developers are a good example to use here. Software developers typically sell their software for a one-time licensing fee – the very notion of financing software (or software leasing) is pretty rare amongst industry executives.
A “Proactive” vendor in regards to equipment financing is one that not only embraces equipment financing, but also must provide such if they want to compete. Offering a monthly payment plan is simply expected by buyers. Automotive Dealers and Office Equipment suppliers are two good examples. Woe to the copy machine manufacturer that doesn’t offer copy machine leasing terms.
Ok, now you know the difference. Really, it’s no more than mindset. There’s no good reason for a passive vendor to remain passive (it’s nowhere to be found in the equipment financing rulebook, which is kept in the same place as the equipment financing dictionary.) In fact, offering a monthly payment option can be a HUGE edge in regards to marketing and sales. Especially here in 2010, where every dollar counts.
I would urge all “passive” vendors to take a look at partnering with an equipment financing company. It could really make a difference this year – in fact, in my experience, vendors that are “new” to equipment financing almost always experience a spike in sales because of such. People like monthly payments, and businesses are no different.