When it’s time for your customers to buy a security system, they face several issues. How well will the system they choose meet their projections for growth? How soon will it become outdated? How much can they expect to pay for service or monitoring costs? And finally, how will they pay for the system?
Customers should realize how they pay for security technology is just as important as what they buy. Budgets, accounting methods and cash flow are all important factors in determining the best method of payment, such as bank financing, dealer terms, lines of credit, cash purchases or leasing.
They also need to be aware of how the acquisition cost of the system (both initial and over time) will impact their working capital and ability to secure future credit.
Dealers who want to propose finance/lease programs to their customers have a number of options. In addition to seeking the assistance from financing companies, central monitoring stations as well as distributors can help you incorporate such programs into their services.
Lease Financing Is More Than Just a Sales Tool
Increasingly, businesses are turning to lease financing to help them obtain necessary equipment and technology because it is affordable, flexible and convenient. In fact, the Equipment Lessors Association reports eight out of 10 U.S. businesses use lease financing.
Moreover, you should understand that how your customers pay affects your bottom line as well. Lease financing offers an easy way to increase both the number and size of sales you make. It’s much easier to sell a monthly payment than a total cash price.
This is a major investment for them, and it is important for you to provide affordability as well as the best service and equipment. By mentioning a monthly payment as part of the sales process, you are making it easier for your customers to say “yes.”
Purchase Options Provide Flexibility for Customers
Leasing makes good business sense. Many accountants advise their clients to pay cash for anything that is appreciable and lease anything that is depreciable.
By using certain types of leases, monthly payments may be deducted as an expense; therefore, the equipment is written off and then returned at the end of the lease to get more equipment.
Leasing Plans Can Act as Problem Solver
There are many types of leasing plans available, and the options may vary from lessor to lessor. As you help your customers evaluate plans, keep in mind these key considerations: budget, cash flow, projected useful life of equipment, desire for eventual ownership, and obsolescence.
Following are some of the more common leasing plans available:
Fair Market Value (True Lease): At the end of the lease term, the lessee has the option to buy the equipment at the fair market value, extend the term of the lease or return the equipment.
Ten-Percent Purchase Option: At the end of the lease term, the lessee can purchase the equipment for 10 percent of the original cost, extend the term of the lease or return the equipment.
One-Dollar Buy-Out: At the end of the lease term, equipment is simply purchased for $1.
Business relationships today are driven as much by added value as they are by price. If you don’t provide an extra dimension to your services, but your competitor does, where do you think your customers might turn when it’s time to make a significant investment in equipment or technology?
Roberta Good is national marketing manager of the Security Division at Advanta Business Services Corp. Security Sales would like to thank Erin Harrington, sales promotion manager for ADI in Syosset, N.Y., for contributing to this article.