The benefits of year-round purchasing
Sales pick up in December; but you can help your customers year round.
By Lucas Deal, Associate Editor
It is not uncommon for businesses to increase their leasing and equipment finance rates in December, says William Sutton, president and CEO of the Equipment Leasing and Finance Association in an article released on Nov. 29.
Taking advantage of expiring tax rates and “use it or lose it” budgets are the most common reasons for this end of the year push, Sutton says, but that doesn’t mean customers will only add inventory in December. If a customer wants to lease a product in December that is great, but he says if you can remind them about the value of leasing in January, too, that’s a definite bonus.
“There are lots of good reasons for businesses to lease and finance equipment in December,” he says, “but none of those year-end factors supersede the fact that equipment financing and leasing is a sound budgetary decision throughout the year.”
Sutton claims there are at least 10 benefits for customers to lease equipment year round. To operate a successful dealership, your sales staff should understand these reasons and know how to communicate them to your customer base.
A dealer cannot operate without a steady stream of customers. Any information you can provide to them to jump start them toward making consistent transactions is a good idea for your operation and your bottom line.
Besides, just because customers are more likely to lease or finance equipment in December, that doesn’t mean they only want to add equipment in December, Sutton says.
If a customer only needs a component for a short period of time, it doesn’t make sense for him to buy the product or wait until December to lease it, he says. Providing the component for the time the customer needs it — whenever that is — is the smart business decision.
Reasons for year-round purchasing
The first reason for customers to lease products throughout the year is the flexible financial solutions they can receive. Because of the financing solutions your business can offer its customers, Sutton says you can tailor leases and rental to a customer’s precise needs.
The next reason customers may want finance equipment year round is capital preservation, Sutton says. The different types of financing your business can offer allows a customer to minimize its capital investment in a product, which helps offset a potentially undesirable yield on a return.
A third benefit of year-round leasing for customers is how it improves expense planning. According to Sutton, large fluctuations to a customer’s budget can be avoided with consistent leasing and financing plans. As a dealer, that is an excellent selling point for your customers.
Another reason to lease products year-round is business cycle flexibility, Sutton adds. You have the ability to stabilize monthly payments and expenses for your customers. That gives them the opportunity to add equipment when they need it and not be bombarded with initial expenses, he says.
You also can provide customers the best technology when you work with them year round. The financing plans at your disposal allow you to provide customers with top-notch technology they otherwise could not afford outright, and Sutton says that’s a great advantage to them.
The next benefit you can provide customers is expertise of your equipment. Sutton says dealers and equipment financers know their products better than other financers, which means you can provide your customer quality information, and financial assistance, when adding equipment.
Another benefit you can provide to customers year round is the ability to manage obsolescence, Sutton says. You have the ability to provide customers quick updates to their equipment through your leasing programs, which helps them avoid keeping products past their usefulness.
Customers also can rely on your business for steady asset management if they lease and finance products year round. By leasing equipment constantly, you can make sure all of your assets are used on a consistent basis an no one piece is overused, Sutton says.
Customers who you work with year round also can rely on you to help them get rid of aging equipment. Sutton says most businesses don’t have a strong plan for selling a product when it stops being used. By being available to that customer and business, you can handle that responsibility.
Your business also can provide a customer year-round benefits by reducing risk. According to Sutton, your ability to finance equipment helps remove risks in a customer’s purchasing and helps their confidence. It gives them the ability to focus more on their business, he says.