I’d be surprised if you hadn’t heard last month Microsoft bought out LinkedIn, but you may have missed the fact that Microsoft is borrowing money to pay for the transaction despite having $100 billion in cash and other liquid assets on hand.
Microsoft isn’t the first tech giant to creatively use financing, and won’t be the last. Back in February, Apple did pretty much the same thing while sitting on a stockpile of cash that - at the time - totaled more than $200 billion.
There are two key takeaways from these two instances of financing being used.
Key Takeaway #1: Don’t Assume Your Customers Don’t Need Financing
Most companies use financing; companies of all shapes and sizes use financing. Big companies, small companies, wealthy companies and cash-strapped companies use financing. In fact, according to the ELFA 72% of U.S. businesses use some variation of financing. The next key is to figure out why (see Key Takeaway #2).
Don’t assume they don’t need financing. Instead, always include a monthly payment option as an alternative to eating up a huge chunk of capital.
Key Takeaway #2: Understand Why Customers Use Financing
According to Bloomberg, "by borrowing, Microsoft will not have to pay a 35% tax rate to repatriate cash from overseas accounts while also cutting down its future US tax bill by deducting interest payments".
Some companies are looking for tax breaks. Others want a predictable budget. Some companies just want to avoid ownership risks of things like technology.
By quoting a monthly payment you’re in a better position to address the customer’s needs. Maybe to fit budget, get what they actually need, or avoid taxes.
When you combine Key Takeaway #1 and Key Takeaway #2 you become more than just a salesperson, you transform into a Trusted Advisor. How do you do that? Simply add a monthly payment option on every proposal and be sure to talk about it with your potential customers.
Prior to joining GreatAmerica in 2004, Wil was an independently licensed insurance agent for the Eastern Iowa region. Wil joined GreatAmerica as a Vendor Relationship Manager for the East Atlantic Region. Wil has also served as the Vice President of Sales for the Office Equipment Group. He moved to Communications and Data in 2009 as the VP of Sales, was promoted to VP/Managing Director in 2012, and in 2014 became the VP & General Manager of the group. Wil received a B.A. degree in Computer Science from the University of Iowa.