The Cost of NOT Financing Technology Blog Feature


Seth Thompson

By: Seth Thompson on April 23rd, 2017

The Cost of NOT Financing Technology

Cost: The Common Objection to Financing Technology

We hear it all the time from our Unified Communications (UC) Solution Providers and Managed Service Providers (MSPs) partners, and I'm sure you do too when you quote customers a monthly payment price for financing technology.

“What’s the interest rate?”

“How much am I paying in finance charges?"

Or even the straightforward response, “We don’t finance technology.” 

Customers see a cash price and a monthly payment and the first thing they do is add the payments up to see what the difference is. They see anything over the cash price as an additional cost to their business. (Brush up on quoting best practices to avoid this situation.) What they don’t take into account is what they are costing their business by NOT financing their technology.

How NOT Financing Technology Hurts Customers Cash Flow and Value

Let’s look at a $50,000.00 technology purchase. Your customer should be looking to use that $50,000.00 on something that is going to help grow their business. While a phone system or IT equipment is essential to keep them up and running, it’s a depreciating asset. In five years, it will be worth pennies compared to what they spent on it and the technology will be obsolete. Because they dropped $50,000.00 cash, they’re going to ride that technology until it dies while their customers feel the effects.

Now let’s say that rather than spending $50,000.00 cash, the customer takes on a $985.00 monthly payment for 60 months. That $50,000.00 is now free to hire a new salesperson, run marketing campaigns, or revamp their website. These are all investments that will generate revenue and help grow their business. This could mean hundreds of thousands of dollars to your customer’s bottom line over the next five years. On top of that, your customer won’t be fishing for another 50k five years from now. They will just sign a new 60 month agreement at the same payment and be able to take advantage of all the latest technology.

How to Position Financing and Monthly Payments to Your Customers

When reviewing a solution with your customer, ask them to look at the big picture. What’s their intent with the technology? What are their initiatives as a business in the near and distant future? What kind of capital will they need for those initiatives? Take a look at this blog for 3 questions that will help you position monthly payments.

As a Solution Provider and their trusted technology resource, you should be helping them get the best technology AND advising them on the best way to acquire it. Financing isn’t the right option for every business, but when deciding if they should pay cash or take on a monthly payment, ask your customer to look at the total cost to their business rather than the cost of this single transaction.

Seth Thompson

Seth Thompson is a Director of Vendor Relationship Development. He helps UC and IT partners grow their business through the implementation of finance programs. Seth started his career at GreatAmerica in 2014 after earning his B.A. in Communication Studies from the University of Iowa. Outside of work, Seth enjoys training and competing in the sport of powerlifting and spending time with his wife and two Shih Tzus.

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