Benefits of Vendor Financing

As a vendor who sells equipment of any kind, one of your major goals is to ensure your clients are getting the best financing programs for their various businesses. Vendor financing is one of the major ways by which business owners keep their clients invested in their business and maintain a high level of traffic and sales. If you are a vendor and you don’t see the value in offering different financing programs to your clients, then you are definitely missing out on a large influx of sales and revenue. In this post, we will shed more light on the benefits of offering vendor equipment financing programs to your clients and show you how much impact it can have on your business.

What is Vendor Financing?

Vendor financing is when a  vendor lends money to his customers to enable them purchase the vendor’s services or inventory, either via inhouse financing or from a partner financing company. It comes in the form of a loan or a lease and may also involve shares transfer from the customer to the vendor. This practice comes in handy when there is a need to bridge the gap between the customer and the business, to increase sales and build a stronger business relationship.

Let’s Get Right to the Benefits

Vendor financing has quite a number of benefits and this is why a lot of vendors do not hesitate to offer financing options to their clients. some of these reasons will be discussed in this section.

 Increased Customer Retention Rate

When you offer financing programs to your customers, you make it easy for them to purchase your goods and services more comfortably than they would at your competition. This in turn builds and strengthens your relationships with them. With vendor financing, your clients become more invested in your brand solely because of the value you offer them through these financing programs. vendor financing helps you address the financial state of your customers, answer any questions they might have on any of the programs and also gives you the platform to help them with present or future financing decisions that come at the end of a lease on a new or existing equipment. This ultimately gives you a great edge over your competition as you are stepping out of the box to make your clients comfortable, and comfortable clients will definitely stick with your brand for a really long time.

Increased Income

Providing your clients with different financing options will definitely bring you more sales and generate a larger percentage of income for your business. This is solely based on the fact that these financing programs make it easier for customers to make purchases without worrying about creating dents on their bank accounts. What’s more? Peradventure the equipment gets sold at a higher price than its original book value, you stand to take home more revenue than you anticipated. It is definitely a win-win scenario regardless of the angle you choose to view the transaction from.

Creating Value

Offering financing programs to your customers helps you offer more value to your clients and makes them appreciate your brand a bit more as it shows you are concerned about their finances. Financing programs helps your clients; ·Save more: since the manufacturer has a good knowledge of the equipment, he would be able to resell equipment that was owned by someone else and thus take some new risks on the value of the product. This way, the customer gets to pay a lower price monthly than what was anticipated.

Get the Best Deals

Your customers will be able to purchase an equipment that they probably wouldn’t be able to without the vendor financing programs. this is because with the use of these programs, the manufacturer will be able to offer more financing terms that would definitely make the client better off at the end of the transaction.

Get the Best Products

Vendor financing eliminates the possibility of your customers leasing an obsolete or bad equipment All these are ways by which vendor equipment financing helps offer more value to your clients which will in turn keep them invested in your business. 4.Customers can Pay Debts Via Business Profits Unlike other loan institutions where borrowers are made to pay off debts from their personal accounts, vendor financing allows buyers to repay their debts via the profits made from the business. This is of more advantage to the buyer as they are not forced to make the payment at once, but can pay in bits until the loan is fully paid.

Gives the Vendor Ultimate Control

During vendor financing, the decision of whether or not the entire transaction will go through lies in the hands of the vendor himself. In most cases, the buyer will not be able to get loans from other financial institutions and will therefore depend on the goodwill of the vendor to finance the entire transaction. This level of control makes it easy for the vendor to inflate the prices of equipment seeing that most times the buyer doesn’t have much of an option but to buy from him.

Annuity Stream

Annuity stream basically explains the fact that a vendor will be able to keep receiving payment from the profits of the business even after the company ceases to function. If a buyer chooses to relent on the repayment of his loan, the vendor still has the right to take back the business and even sell off some assets belonging to the company in the bid to regain the unpaid amount. Vendor financing is definitely a growing trend in the business world as it offers vendors more opportunities to make higher sales, revenues and retain their customers for long periods of time. Studies show that about 30% of equipment sales are funded by the manufacturers or their business partners and this proves the fact that more and more vendors are onboard this financing train.

The rate at which vendors engage in this practice keeps increasing especially as financing division is playing a more crucial role in the business and marketing strategies of different manufacturing companies. If you are a manufacturer and you haven’t included vendor equipment financing programs or options to your business strategies, then you might just be missing out on a huge chunk of revenue and profit. What are you waiting for? Start offering financing options to your customers today!

For information on our vendor financing programs, or to apply to become an approved vendor, please fill out this form here.

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