Published March 14, 2018 | Updated June 15, 2022
“Cash flow is not just a thing. It’s the only thing.”
– Principal of a $114 million office products business
You often hear finance companies speak of the importance of selling a payment for your equipment or even leading with one. And that’s not just good for the finance company – businesses will generally buy more things if they have more cash to do it.
But what about your cash flow? For dealer principals, cash flows are the life blood of success, just like it is for your customers. So how does your finance offering impact your ability to manage the flow of cash through your business?
According to industry statistics, the average office product sale is made on credit terms and takes an average of 36 days to fund into your account. Once a customer chooses your finance option, the average finance program funds the total amount of the sale into your account in an average of 11 days, with some providers funding as fast as the next business day.
Notice the phrase “total amount of the sale.” When equipment is not financed, items like delivery, installation, and other services can further stretch the receivables cycle. But the right finance program can include all of those soft costs in the up-front payment.
That can mean getting your money three or more weeks sooner (on average), which has several advantages:
- Lower inventory carrying costs, including interest rate expense
- Less time collecting receivables – a highly labor-intensive and relationship-sensitive effort
- Increased operating cash levels to make payroll more easily and/or pay commissions faster, a competitive advantage for recruiting hard-to-find sales talent
- More capital availability to finance inventory and potentially deliver customer orders faster, without additional cost
But finance programs don’t just impact cash flows on the back end. They also heavily impact revenue growth.
The more your sales organization can simply and easily offer customers equipment, technology, service, delivery, and installation with a simple monthly payment, the more you sell. More cash on hand can also lead to an increase in marketing dollars. In all these areas, the finance program becomes a high-ROI supporter of additional cash flows and growth.
At LEAF, we help dealer principals with far more than a simple finance program for your equipment. We make your equipment easier to buy with customized solutions that solve real problems – like increasing the amount and velocity of your cash flows.