Show Me the Money
by Dan Timmer on Friday, January 30, 2009
The economic crisis of 2008 has impacted all industries and businesses. The credit crunch that affected the financial markets has been headlining the news for months and has led to a bailout package by the US government that could end up exceeding $1 trillion. Many dealers and VARs are wondering what the implications are for them and their customers. Is money still available to customers looking to finance communications and data equipment? Absolutely Yes!! While the access to capital may have tightened for some companies, particularly brokers, theare plenty of funds available for equipment financing.
Sales are down for most dealers, but the current economy has provided an opportunity to differentiate and grow through the adoption of standard financing and managed services programs.
Many customers that previously didn’t consider financing their equipment acquisitions are now looking at it out of a desire to keep a cash reserve. Leasing is ideal for companies that want to invest in technology to improve their profitability and gain a competitive advantage. They understand the benefits of financing depreciating assets and using cash and credit lines for revenue generating activities like sales, inventory and advertising.
Financing programs not only benefit customers but they provide significant value to dealers, especially as most are facing declining sales and margins. Leasing can help dealers increase sales, improve margins, increase deal sizes and reduce discounting. “At GreatAmerica we are known for our ability to help dealers create and implement a managed services program within their business,” said Marty Klees, Senior Vice President and General Manager of the Communications & Data Group at GreatAmerica Leasing Corp. “Additional benefits that dealers will see from implementing a bundled billing or managed services program is that it differentiates their business, secures recurring maintenance revenue for the full term of the agreement, better protects their customer base, and significantly increases add-on and upgrade sales.”
Many dealers understand the benefits of leasing but think it doesn’t matter if they cannot get their customers approved for financing. “To those dealers I would contend that at GreatAmerica our philosophy is to be consistent in our credit analysis in both good and bad economic times. There are obviously some industries that have been particularly hard hit like automotive, residential construction and real estate. When conditions unfavorably affect an industry overall, we have to assess the borrower’s ability to manage through the slowdown. Factors such as their liquidity - a combination of cash flow and access to capital, tenure and the experience of management become even more important in the decision.” said Klees. “I think dealers will be comforted to know that our approval percentages have been relatively unaffected through this downturn in the economy.”
To summarize I would say that financing is readily available. The current economic environment has caused more customers than ever to consider the benefits of financing when evaluating equipment purchases. Financing programs, especially managed services, provide dealers with an opportunity to differentiate their businesses, improve their profitability and position them for long-term success.