The leasing industry has changed dramatically as leases have become simplified and easier to originate. This evolution has enabled equipment vendors to incorporate the availability of streamlined leasing into their sales processes at the point of sale.
Over the years, the relationship between equipment vendors and the finance companies that fund their transactions have evolved. It wasn’t all that long ago when the finance company was essentially a third party provider, offering financing to customers of the equipment vendor, but participating in the transaction at the proverbial “arm’s length.” That is changing rapidly as equipment companies and their finance companies work closely together to both attract new customers and to close more transactions. Today’s modern finance company has become more of a partner to the equipment vendor, instead of merely functioning as a service provider.
There are many reasons why an equipment vendor’s customers choose to lease their essential business equipment. The most obvious is that leasing makes sense financially by helping companies of any size to preserve cash and conserve existing credit. Cash preservation happens because a business doesn’t have to dip into cash reserves to pay a lump sum price, or even an expensive down payment for that matter. From a credit standpoint, since a lease is a separate transaction and not a part of an existing credit line, it leaves available credit untouched and available for other, business-critical uses.
As important as these financial considerations are however, there is another equally important reason why businesses lease equipment. The reason is pretty simple—equipment leasing is exceptionally convenient. Businesses that need equipment can acquire it very quickly, with a minimum amount of paperwork and hassle. This serves the equipment vendor very too, of course—leased transactions close more quickly as well.
In the early days of leasing, this wasn’t necessarily the case. The finance companies were just figuring out how to best package their lease offerings and how to structure them most effectively. There were often disconnects between what a business customer needed and what the finance company was providing.
Business communication was also fully dependent on the technology of the day, which included telephones, fax machines and overnight delivery services. Originating a lease—or any financial transaction, for that matter—was a somewhat time-intensive, laborious process. Equipment vendors weren’t completely sold on leasing because even though it offered some advantages, getting a lease started and approved took a fair amount of time. The reality was that if a business needed equipment quickly—and if the equipment vendor wanted to close the transaction quickly as well—the best approach was to convince the customer to pay cash for it.
These days are long gone. The business equipment leasing industry has been around for quite some time and has become very adept at adapting and adjusting to the market and its needs. Forward looking companies are constantly developing and releasing new lease products and services that are increasingly more convenient and easy to use. These companies have also streamlined their processes to ensure that lease customers receive timely, effective service, on demand, whenever they need it and wherever they happen to be located.
Equipment finance and leasing companies continue to improve and enhance their operations by leveraging technology. Streamlining the lease origination process is an ongoing effort in most leasing companies. Customer service metrics continue to improve, while billing becomes more timely and accurate. The leasing companies are also using ongoing process improvements to become more profitable as well.
Business processes of the financing companies are being integrated with their vendor-partners to make it much easier for the equipment vendor’s sales force to originate a lease, and for the vendor’s administrative team to service it over time. These efforts have created a much closer bond between equipment vendors and the finance companies that support them. By offering fast and efficient leasing at the point of sale, vendors can not only close more transactions more quickly, but can also provide a valuable and appreciated service to their customers.
For first time customers, originating an equipment lease that is customized to the particular and specific needs of the business is a relatively, easy and straightforward process. A leasing company that specializes in business equipment with a close working relationship with the vendor can turn things around very rapidly. With a minimum amount of paperwork, fast credit decisioning and round-the-clock customer service, most new customers can get an approval in several hours. For this reason, sales people who incorporate a lease option in their sales pitch can use it to dramatically accelerate their sales cycle.
After the first lease, things tend to get even better. Once a joint relationship between the equipment vendor, the end user and the leasing company has been established, adding new equipment to an existing lease, or refreshing equipment that’s already in place can often be done with nothing more than a phone call—or text message.
Of course, technology is the obvious enabler at the heart of the streamlined lease that most lessors offer today. Leases can be originated using a portal that accepts applications 24/7, 365 days a year. On top of that, leasing companies are increasingly making the portals compatible with handheld devices, which allow an equipment vendor’s sales rep, for example, to originate a lease directly at the point of sale using nothing more than a smart phone.
Technology however isn’t the only factor that has streamlined the leasing process—it’s also a result of the leasing companies themselves. In a competitive industry, taking advantage of new technologies and leveraging it is only the first step. A much bigger change has taken hold in the form of a firm commitment to customer service, and the strategic focus on building long-term customer relationships instead of concentrating on individual lease transactions.
The fact is that equipment leases can greatly improve an equipment vendor’s sales process, by providing a fast, efficient, and most importantly convenient method for a customer to acquire needed business equipment.