I’ve talked before about how offering credit / equipment financing can actually be a form of marketing, and I’d like to return to that today. Because today, with the economy fairly stagnant, offering equipment leases / payment terms might very well set you above your competition.
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.