Every business out there is looking for ways to increase their sales, generate more income for their business, and otherwise are continuing to climb the hill of success in their market or industry.
Each industry has different ways to increase sales and improve their chances of success. Today we explore a form of financing, called vendors finance, that may not be common in some industries, but may be more prevalent in others.
What is a Vendors Finance Program?
In a nutshell, a vendors finance program, depending on how it’s structured, allows your business to essentially become a “bank” for your customers.
Typically, without a vendors finance program, if you sell a product that may have a higher ticket price, a potential customer would need to get a loan or outside equipment financing in order to purchase your equipment. There’s nothing wrong with that scenario, but it immediately rules out a segment of your customer base that may not be able to secure an equipment loan.
Simply because they may not have the right credentials at the time, they’ll be unable to buy from you and may have to go to a competitor for a different piece of equipment or not buy at all.
With a vendors finance program, rather than having your customers seek outside equipment financing, they can go directly to you to get the equipment financing they need. A vendors finance program practically makes you a “bank” on top of the services and products you already provide. In addition, because the vendors finance program is more under your control, you can create better opportunities for your customers.
When you partner with an expert equipment financing professional, you’ll establish an infrastructure within your business that allows you to essentially become a “bank” that provides some form(s) of financing to your customers.
Rather than having to go to a bank, they go to you instead. While to them it will seem like they’re getting a finance program from you, the vendor finance program uses an outside financier to fund your loans and financing services while simultaneously operating under your own brand name, if you desire.
A vendors finance program not only helps your customers, but it helps you to directly increase sales by reducing the number of restrictions for your customers to buy from you.
If you sell higher ticket items or make larger bulk orders, vendors finance will help you increase sales and profits in two ways:
1.) Secures the sale of your product (as mentioned above), to increase the likelihood of a successful transaction.
2.) Allows you to generate interest from customers (depending on how you structure your vendor finance offerings).
Why Use A Vendor Finance Program to Increase Sales
Vendors see customers that are start ups and good or bad credit. A good vendor financing program is a one stop shop for all your customers with different credit profiles. The other day I was talking to one of our vendor partner reps about an experience of theirs … an experience just prior to working with us.
They had a customer that was very EXCITED. The customer wanted to buy several machines, and then had plans to buy more next quarter, and then more six months out.
The client’s customer was getting ready for a huge expansion of business. So of course our vendor partner was doing everything they could to secure the deal. It would have been a win-win for both of them.
So when the decision came back: DENIED for exposure reasons… Their heart sunk. First our client had to let their customer know that they would look for an alternative means of financing… And then the search was on.
Unfortunately their customer had a rough year prior to the big contract award and so their credit was questionable. The banks wouldn’t take the “promise” of future business to help secure the loan.
So while our client had to hunt for a way to finance the deal, they at the same time had to reassure their customer that they would find a solution. It was then that our client found us. And it didn’t take long for us to save the deal.
We came up with a solution that satisfied both our vendor partner and their customer. After we solved that challenge, we discussed other solutions for future customers.
Give Your Customers More Options and Create More Accessibility
Let’s take a look at a scenario where vendor finance can provide more accessibility to your customers. Let’s say you’re in the medical field and provide medical equipment to medical practices in your area.
When you choose to partner with a medical equipment financing company, you can sell medical equipment at potentially reduced rates and more customized terms than your competitors are offering.
Through a vendor finance program you’ll have the option of providing medical equipment and a financing solution to all of your customers. Otherwise, without a vendor finance program as a service when providing medical equipment, your customer has only a few limited options:
- Buy it outright with money they have on hand.
- Use a credit card.
- Borrow money from a friend.
- Not purchase the item.
Now if the customer can’t use these options, they’re stuck with the last choice: not being able to purchase an item from you, which means a loss of a sale.
But with a vendor finance program you can provide unique financing solutions to your customers.
By providing vendor equipment financing options to your customers, you eliminate most of the reasons a customer will have for not buying from you (like not having enough money or their credit card not going through). Simply providing another avenue for them to make a sale is the first step in increasing your sales.
Using A Vendor Finance Program to Increase Sales
Let's face it, If you don’t have a vendor finance program built into your business yet, you’re missing out on potential sales.
Lead With Leasing
If you don't have a dedicated financing/leasing desk. It's best to train your sales team how to use lease rate factors, online and excel financing proposal generator tools. Leading with a low monthly payment lowers the sticker shock of your equipment. It's also wise to train them on how to present an ROI to the customer using a monthly payment option.
Here are example vendor finance calculators to utilize. We can customize each vendor finance calculator.
- How much equipment can I afford to lease?
- Equipment lease interest rate calculator.
- Equipment lease payment calculator.
Build A Subsidized Financing Program
I love the concept of auto loans for new cars... You can make payments on the car with 0% financing and save a lot of money.
Well at least it seems that way. And the customer walks away thinking that they got a great deal. Meanwhile the car dealership gets their full payment, and the interest is also paid.
Everyone is happy. So how can you apply this to equipment sales? This is where Trust Capital USA can help you.
We can help you setup a “0% financing” arrangement for your customers, and help you close more equipment sales.
It’s a win-win for everyone:
- Customer gets a “deal” with small monthly payments
- You get the equipment sold and get paid up front
Combine Vendors Financing with Marketing Initiatives
You’ve seen a variety of equipment financing offers and financial incentives all over the place already. From restaurant equipment dealers to tow truck dealers to medical equipment vendors. Get the merchandise and make low payments for a certain number of months followed by a long low monthly payment plan.
If you have a physical location where your equipment is displayed to your customers. Put a monthly payment option on the equipment somewhere to see.
With the help of an equipment financing company you can establish equally captivating marketing offers to potential customers.
While you could go out and promote your product on its own, by offering equipment financing payments and offers that make customers realize how easy and “affordable” your product is, they become more likely to stop and make a purchase.
Combine Vendors Financing with Online Initiatives
It's important to have a dedicated equipment financing page by including an easy to find landing page within your site— highlighting available financing options you add exclusive value to your companies brand and keep your viewers’ interest on your site.
Vendor Finance Makes More Sales (and Larger Sales) More Likely
If you give one person a stack of cash and the other a credit card, it’s easy to guess who is more likely to spend more money.
When someone only has cash to work with, the moment they run out is the moment they can’t buy anymore. But if you give them the option to pay with credit (and use your vendor financing program), then suddenly it will feel like they have a much larger wallet to work with.
By providing equipment financing options to your customers, you eliminate most of the reasons a customer will have for not buying from you (like not having enough money or their credit card not going through). Simply providing another avenue for them to make a sale is the first step in increasing your sales.
Understand Your Business, Industry, and Market
Before you begin implementing a vendor finance program, you have to research your market and industry to ensure that it’s a smart play on your behalf to integrate into your business infrastructure.
At the end of the day, you have to be able to look to your own business, your customer base, and your market to understand whether or not it makes logistical sense to include a vendor financing program in your services from your business. If you're selling equipment over $25,000 the answer should be yes.
There are many factors that go into determining whether or not it’s a smart move to add vendor financing, and therefore we recommend consulting with an equipment finance professional to help you go over all the advantages.
Implementing a Vendors Finance Program Into Your Business
Once you’ve decided that a vendor finance program makes sense for your business and will help to improve your overall sales, the quickest way to implement a vendor finance program is to consult with an equipment finance professional at Trust Capital.
As an equipment vendor you're going to have to decide if you want to use your own money to lend out, have a few banks and equipment leasing companies in your Rolodex to call when the occasion arises, have one solid vendor partner program worked out in advance or go full fledged and build a captive finance company to increase sales.
A Captive Finance Company For Equipment Sellers
This type of finance program is common among large equipment manufacturers that have a large sales force over 10 and finance at least 4 million dollars of equipment a year. This type of program is good if you want more control over the equipment financing sales process, everything branded in your companies name, to increase customer service, to increase sales, and increase profits.
You can consult with an equipment financing specialist at Trust Capital that is specialized in providing equipment financing services in your specific industry, who can not only advise you on the most efficient finance program to implement, but can actually work with you one-on-one to integrate it into your existing business infrastructure.
While working WITH YOU, we’ll help you:
- Remove the administration burden of managing your own equipment financing program.
- Close the sale quicker by offering your customers easy payment solutions that will keep the sales process moving.
- Save time with the full service approach, and just one point of contact.
- Gain repeat sales since it will be easy to add-on to your customer’s current financing program.
- Increase sales through working together as a team.
Contact Trust Capital today at 866-458-4777 to learn more about a vendor financing program for your customers that will help you to increase sales for your business.