Pick Partners Carefully -
What happens when customers want you to help them find financing for the equipment you want to sell them? You help them. One alternative is to refer them to a leasing company.
Recommending a leasing company partner will allow you to maintain control of the sale and your customer. If customers choose to go to the bank, you will likely lose control of the sale.
Customers are precious. Sales people and business owners work for years to nurture those relationships. Great service and diligent follow up is essential. Why allow a stranger, to enter between you and your customer?
If you have not properly vetted your financial referral partner, that is what you are doing.
Screen Your Associates Carefully: Tips to Use
Turnaround Time. The size of the sale should determine your approval turnaround time. Twenty-four hours is a rule of thumb for deals under $25,000 for a company in business 5 years or longer.
No Rate changes. As long as the equipment delivery is within 60-days of the customer's credit approval, the lease rate should remain constant. The leasing company should not change rates at lease commencement. That's a bait and switch surprise.
Easy Paperwork. For financing under $50,000 a 4-page lease agreement should be the most your customer is required to sign. Bulky and cumbersome contracts may scare your customer away or cause them to retain an attorney to review and renegotiate the lease. That costs your customer time and money.
References. Contact at least 3-4 customers of the leasing company who have reached the end of the lease and negotiated successfully through any "end of lease surprises." There should be none that leave a bad feeling in your customers gut. This is not the partner you want to share your customers with, if you hear about tough end of lease negotiations.
Ugly Surprises. One big surprise some leasing companies employ is the end of lease purchase that customers view to be too high and certainly not a "fair market value" price. Another common surprise is if the lease automatically renews for an additional year of payments. Your replacement or upgrade sale is blocked for 12-months due to your "financial partners" lease gotcha language.
Prompt Payment. Talk to other equipment dealers who have used the leasing company you are considering. What has been their experience in receiving payment? Your goal should be net 7-days from the date of the customer's equipment acceptance and lease commencement.
Confidentiality. Reference checks again will help you to determine if the leasing company is one that "kisses and tells" about your company to your competitors who they also work with.
Screen carefully. When you find a leasing company that delivers all seven requirements, stick with them. That's what partners do.
Mary A. Redmond provides highly specialized information for corporations, managers and dealers who negotiate and manage leases. With 28 years in the leasing industry, including 21 working for the largest leasing companies in the U.S., Mary knows leasing. You may reach Mary at 913-422-7775 or email@example.com
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