Customers who need critical business equipment will often put the decision off for months or even years, waiting for “when the time is right.” For some, this means when business picks up; for others, it means when there is more cash in the bank. Regardless of the reason, the acquisition is often delayed, forcing the business to get by on the equipment that is already in place. This in turn can lead to reduced operating efficiency and a lack of productivity, which ultimately leads to reduced profitability.
Putting new equipment into place as soon as it is needed—instead of when money is available—can transform a business. Not only does improved operating efficiency lead to more profits, but it also leads to happier customers. Happy customers tend to spread the word about a company they like doing business with, bringing in even more customers. Equipment vendors can play a role in this transformational process by expediting the process of acquiring needed equipment simply by offering a robust leasing program.
Leasing helps customers do many things. By making the customer aware of the power of leasing during the sales process, the equipment vendor enables the customer to make the changes that are needed using an affordable and cost effective financial tool. It simply makes good business sense to transform a business using lease financing.
Most customers will not set out to acquire new equipment unless they have the means to pay for it, which becomes the problem itself. Small and medium-sized businesses often operate on relatively thin margins and do not have an excess of working capital simply lying around. They tend to put their capital to use as effectively as possible and that usually does not include maintaining a pre-allocated fund for equipment purchases. Even if borrowing funds in the form of a traditional loan is an option, doing so still requires a down payment and an outlay of cash.
These issues create roadblocks in the sales process and completely deter the purchasing decision. The market saw ample evidence of this during the economic crisis because businesses were unsure what was happening financially and tended to hold onto their available capital at all costs. Purchasing decisions—critical decisions that needed to be made—were delayed, often indefinitely, until the smoke cleared and the economy corrected itself. Equipment vendors subsequently felt the pinch as their sales slowed, a result of this paralyzed thinking.
Because lease financing solves many of these issues, it can actually help an equipment vendor to accelerate sales. Simply by providing an alternative means of payment that actually serves to free up existing capital, the equipment vendor provides significant incentive to close the transaction for critical equipment when it is needed. When a customer realizes not only that capital is available but also that they can afford to use it, many of the objections that slow or completely stop a sales process simply go away.
The biggest objection to using lease financing as a closing tool is that customers often do not understand leasing or they have misconceptions about it. Customers may not be familiar with leasing terms, or the structure of an equipment lease. In some cases, they simply insist on owning equipment rather than “renting” it. In other words, leasing is not viewed as a viable method of acquiring the equipment.
These kinds of objections can be easily overcome by incorporating lease financing early on into the sales process. By positioning leasing as a powerful financial tool than can become a valuable strategic advantage and then explaining how it works, the equipment sales person becomes less of a vendor and more of a problem-solving consultant. Showing customers how they can afford to purchase needed equipment when they need it not only results in more sales for the equipment vendor, but it also builds solid, long-lasting customer relationships as well.
Equipment financing is a powerful tool that can help close sales and drive revenue. By combining an understanding of how lease financing works with a willingness to spend a little time educating the customer about it, equipment vendors can quite effectively remove one of the most basic objections in sales—the perceived inability to pay.