One thing that’s always interested me is using equipment financing to help close sales.

I see this up close, because besides offering financing directly to end users, my company also works with equipment manufacturers and distributors, providing financing to their customers (so when you look to buy a new widget and see “financing offered” on the manufacturer’s website, that’s almost always through a company like mine.)

In business-speak, these companies we work with are our “vendors”. And I find there are generally two types of vendors:

Passive Vendors: These vendors generally offer financing only when the customer asks for it. Maybe (just maybe) they’ll put “financing available” on their website. But that’s about it.

Active Vendors: These companies see financing as not just a convenience for their customers, but also use it as a sales tool, offering “monthly payments” every chance they can, be it on the website, in sales literature, at the trade show booth, in face-to-face sales calls, and more.

To me, passive vendors are like shoe salesman. They sit back and wait for the customer to come in and say “I want that”. Now, no offense to shoe salesman, but the profession is somewhat portrayed negatively in popular culture – always the more or less underachieving guy who accepts whatever scraps life gives him. That’s a passive vendor – always wondering why sales aren’t what they should be. Well, maybe stop being a shoe salesman and start using the tools available to sell more?

I say this because I see a huge difference in active vendors. They always seem to be doing better than passive vendors, in any economy. That’s because they are proactive – they see equipment financing and monthly payments as a way to sell more. And they use it.

Here are some ways active vendors use equipment financing to close more sales:

• Big and bold on the website. Every piece of equipment has a price, and something like “financing available” or even “as low as xyz a month”.
• They mention Section 179, and how it fits like a glove with equipment financing.
• They offer deals and financing on last year’s models to move inventory.
• They offer to take trade in’s on older equipment, and yes, my company can finance the new equipment, as well as the old when it’s offered for sale.
• The reps talk financing at sales calls and the trade show booth.
• They offer special financing deals, like “no payments until next year” or custom structures, like “no payments in winter” (for a northeast golf course). Yes, a good equipment financing company will offer these things to proactive vendors who want to use them.  

Ask any salesperson – the #1 objection to any sale is price. Equipment financing and monthly payments can eliminate that objection. It’s the ultimate deal closing tool, and active vendors and successful salespeople use it to its fullest.

Let me tell you a quick story. When I was a kid, I had a friend named Joey. Joey’s father always got cool stuff in the mail – I’m talking stereos (although Joey’s bell-bottom-wearing dad called it a “Hi Fi”), bikes, all kinds of toys, etc. Now, my family got stereos, bikes, and toys too, but we went to the store to get them. Joey’s family got them through the mail, which to my mind, was really, really cool.

So why didn’t Joey’s family get their stuff at the store? I found out later it was because his father did not have great credit, so they didn’t have a regular credit card like everyone else. However, his father DID have a credit card with a certain mail order company that specialized in giving credit to people who had trouble in the past. The catch was, you could only use that credit with them, and in their catalog. You could use their card to peruse their catalog and buy a lava lamp (to go along with your HI FI, I suppose), but you couldn’t use it to buy dinner at a restaurant. Talk about good marketing…

The point I am trying to make here isn’t about bad credit or what silly 1970’s-era people called their stereos. It’s the fact that Joey’s father chose to shop with a company simply because they offered him credit. It’s a big deal.

I see this kind of thing every day in equipment financing. Not so much in the bad credit aspect, but in that companies repeatedly choose to buy equipment from vendors who offer a payment option. In many cases, it tips the scale.

Think about it – you’re a company, and you are looking at six machines that cost 30k each. You can go to vendor #1, who does not offer equipment financing, or you can go to vendor #2, who does. Everything else is equal, save for the financing. In most cases, vendor #2 will sell more equipment, simply because they allow their customers an easy way to acquire it, without depleting their cash reserves, and without jumping through hoops at the bank. Again, I see this over and over – offering a simple payment option increases sales. And you know what? It’s really easy – you can literally offer a payment option on your website in ten minutes. Talk to your friendly equipment financing guy (me or someone like me, only not as charming), and ask about it.

Now I have to go, because I saw a sweet deal on a used Boom Box.