When was the last time you purchased a car without sitting down with the finance manager to work out the details? Or went shopping for furniture without being presented with extended payment terms? Several industries have made an art of combining the “sales close” with a neatly packaged finance agreement to help pay for your purchase. Many companies even discourage paying for cash since they know if you finance your new machine, chances are you will buy the “deluxe” unit with all the options.
The psychology of giving someone the option of paying $10,000 for something in one lump sum or $200 per month over a few years is that there is less pain and risk in budgeting a $200 payment into your monthly expenses. The pain is losing a large sum of money all in one shot and the risk is being without cash if an emergency happens. A good personal and business plan is to match revenues with expenses; in your personal life that means matching your income flow with your monthly payments and for a company, it means matching the profit a new machine will generate to the monthly finance payment. In an optimized scenario, new equipment will pay for itself with the sales increase and cost savings realized.
Every company selling equipment, whether they manufacture it themselves or act as a distributor, can benefit by adopting the policy which so many mainstream businesses have – offer a finance payment option with each quotation or proposal and at the closing discussion of each sale. It gives your customer a great opportunity to consider another way to buy your product; the statement, “I can’t afford it” can readily turn in to, “I can probably afford monthly payments”. The more roadblocks you remove from your client’s perception, the better the chances of closing a sale.
If you leave the finance choice to your prospect without offering them a direct solution then you also take the chance that they will wander off to find financing on their own. If they find their own financing then chances are, since they have taken the trouble of getting their own lender, they will probably shop around and they may never come back to your company to complete the purchase. Some commercial lenders even encourage their clients to look around and get several bids. A large part of buying is an emotional process and even when a purchase can enhance a company’s output and save them money, they still may be pulled in different directions when it actually comes down to making the decision.
Eliminate the chance of losing a client by offering them a payment option through a finance company which you have formed a strategic partnership with; these are often referred to as “vendor programs”. Through a vendor program you will get direct support and training throughout the funding process. Don’t let your valued customer wander off to get their own financing or simply reject your proposal because they don’t want to spend the capital. Your goal is to offer a complete product and part of that is a payment method which makes the process easier and will build your profits and sales which will help you grow into the future.