Why Offer a Lease Quote
By Kevin F. Clune, CLP
A common response that we have been hearing from Vendors is that their customers don’t ask for financing.
As was discussed in the March e-newsletter, the abundance of cash has reduced the demand for financing of newly acquired capital equipment with a loan or lease. As a vendor, you may feel that you should not challenge your customer by recommending that they consider a lease.
However, even in these cash rich times, a lease may be the better option for your customer. At the very least, our vendors report that it’s a great conversation starter. Also, there are benefits for equipment vendors who offer leasing to their customers, provided you are working with a reputable leasing company. Why is this true and how does an equipment dealer explain the benefits of leasing to their customers?
1. Tax Benefits: A lease can also qualify for Section 179 tax advantages. Use the Clune Tax Calculator to determine the potential savings. Your customer will appreciate this information.
2. Equipment Obsolescence: Businesses can remain competitive if they can avoid being stuck with aging, outdated technology. Equipment that is financed with a lease can be easily upgraded to the latest technology.
3. Establishment of Relationship: At the end of the term of the lease contract, you will have a reason to contact your customers who had decided to lease. The customer’s options will typically include an upgrade to new equipment, renewal of the lease for a certain time period, return of the equipment, or purchase of the equipment for a pre-determined price. With each scenario, you will have had another opportunity to work with this particular customer and will sell new equipment, and/or have the returned equipment for resale to another customer. It is a win/win for both you and your customer.
4. Additional Sales Tool: A Lease quote is another way for your customer to say “yes” to an equipment purchase. In addition to the total equipment cost, you can also include a monthly lease payment option in your proposal. Are you possibly losing sales to competitors who offer financing?
5. Prompt Payment: How quickly will you receive payment with a “cash” purchase? We normally pay our vendors the same day they install. How does that compare to a cash sale to a customer?
As mentioned earlier, many of these advantages that are listed above all hinge on a partnership with a reliable lease partner who you can trust with your customer. A salesman who values an ongoing relationship with a customer needs to have confidence in the leasing company they recommend.
With a dependable lease partner, an equipment vendor can become knowledgeable about the benefits of leasing and be able to articulate this to their customers. In the end, they will be able to offer an additional payment option to potential buyers, and may have begun a long term relationship with a satisfied customer.
Kevin F. Clune, CLP
Clune & Company
