Payment terms can be a struggle. We all have to offer them, but let’s face it, it’s actually an extension of credit to your customers. An extension of time where your money is at risk and cash flow is depleted. In the equipment sales business, payment terms of net 15 or 30 can easily turn into 45 days and beyond making an already less-than-ideal situation…even less ideal. But what if we told you there was a no-cost, simple way to reduce the payment cycle for your equipment sales to as little as 3 days?
Finance programs for your customers can increase the velocity of cash flows. When a customer pays for your equipment, a strong finance program funds your company via overnight check, wire or ACH transfer in just a few short days. No lengthy process of issuing an invoice, collecting part of the money up front and waiting 30-60 days for the rest. 100% of your invoice…including costs like installation and service…in your account. Further, waiting on a customer’s bank can take weeks of lengthy credit committees and cumbersome processes. By leveraging an equipment finance program with deep experience helping manufacturers, dealers and vendors grow sales, the speed of the finance process–and timeliness of payment–is significantly improved.
The impact of accelerating of cash receipts on an equipment sales operation is significant. Improving inventory management, lowering floor plan expenses, faster delivery of equipment, increasing customer satisfaction are just a few small benefits.
Some equipment finance programs actually allow for something called “pre-funding”. Many equipment dealers and distributors don’t have the inventory on hand to immediately fulfill the request of the customer. Ordering from the OEM adds time to the receivables cycle. Pre-funding allows the dealer or distributor to get a significant percentage of the equipment investment funded at the time of order from the OEM, reducing the receivables cycle and the cash burden of ordering the equipment. It also give the dealer or distributor the confidence to meet the needs of their customers without having to carry inventory levels that might be burdensome.
In addition to the rest of the overwhelmingly important benefits of establishing a finance program for your customers, you might want to add “getting paid faster” to the top of the list. At SLS, we know that affordable monthly payments increase sales and our finance programs can lead to improved cash flow cycles. I guess you could say we keep things uncomplicated. If you would like to discuss how to leverage financing as a tool to increase the velocity of payment, contact us today.