Most customers don't ask about finance. Why should I recommend leasing?
Leasing gives the customer another option that may suit them better than purchase and may speed up your sales negotiation. No capex is required, only approval for a monthly payment. Similar to renting a mobile phone, leasing IT equipment has the benefit of being able to upgrade when your customer wants to.
Many customers have a finance facility with their own bank or financier. Why should I recommend leasing?
Offering leasing allows your customers an easy and convenient to do business with you. A total finance solution allows you to stay in control, with the potential of ongoing repeat business.
Many customers want to own so why should I recommend leasing?
Customers have the option to purchase equipment at the end of the lease term. In addition, leasing removes the risk of owning obsolete or unsuitable equipment and provides the opportunity to replace it with the latest technology.
Sometimes a customer says they own everything and that they don't lease. How can I deal with this?
Almost certainly they will be leasing or renting something as part of running the business. For example, mobile phone, office or warehouse space, copier, car, electricity, plants. Simply ask them how they acquire some of these obvious items.
What is a good way of demonstrating to a customer that leasing is cash flow friendly?
Leasing allows you to pay affordable monthly payments and spread the equipment cost over its useful life. Purchase means that you are paying for 3 or 4 years use up front. Would you pay an employee's salary, 3 years in advance?
What are the end of term options if I lease? Do I own the equipment?
You can make an offer to purchase some or all of the equipment if you want to own it. However you also have a number of other options that may help you better manage change.
For example:
- Continue to lease some or all of the equipment for a further period or
- Trade up some or all of the equipment, to new equipment or
- Return some or all of the equipment…with no further obligations
How will leasing help me sell more?
It is easier to sell a "payment" than a "price". An affordable monthly payment takes the focus off a large capital outlay and can eliminate the pressure to discount. If a customer purchases it may be 4 or 5 years before you get another sale. With leasing you have an opportunity to sell them replacement equipment in 3 years or earlier.
How does leasing help me when the customer doesn't have the capital to purchase my solution?
If the customer has to get capital approved or has to wait for next year's budget, it delays your sale and makes it harder to get your targets. Leasing is an operating expense and generally requires a lower level of authority to approve it, which may speed up the sale and get you closer to your targets.
How does leasing help my cash flow?
Running 30-day accounts is costly and time consuming to administer. If accounts aren't paid on time, the margin is eroded by the cost of carrying the debt. Leasing means you get paid by direct credit very quickly and debtors and 30-day accounts can be eliminated. No risk, no loss of margin and a boost to cash flow.
How does leasing help me to increase the size of my sale?
Leasing gives you the ability to bundle hardware and "soft costs" into a single monthly payment. A few dollars extra per month compared to a capital outlay, is also a great "up selling" strategy, resulting in larger sales.
How can leasing shorten my sales cycle?
When customers purchase and the equipment has to be depreciated, it is often 4 or 5 years before you can sell them replacement equipment. Leasing gives you the means to replace equipment during, or at the end of the agreement, bringing sales forward as the customer has no obligation to keep or own the equipment.
How can leasing help me sell more equipment upfront?
Any organisation with a recurring annual IT budget can acquire approximately 2.5 times more equipment upfront, with leasing compared to purchase (*Based on a 3 year term)
How can depreciation prevent me from selling the customer new equipment?
With rapidly depreciating equipment the book value often exceeds the market value. In this instance, organisations are often forced to retain equipment beyond its useful life with some adverse consequences.
For example,
- You are denied a sale
- The customers productivity and efficiency may suffer
- If the customer is forced to sell the equipment to make way for new, they incur a loss
Recommending leasing can avoid these costs and risks.
How do I respond when the customer asks me the interest rate?
A lease agreement is a fixed fee for usage of the equipment for a fixed term. It is like a mobile phone rental or office rental. It is not a loan, like a finance lease or hire purchase and as such doesn't have an interest rate.
What's the difference between an operating lease or rental and a finance lease?
With an operating lease or rental there is no residual risk ie you have no obligation to pay a pre-set residual value at the end, as you do with a finance lease. By leasing you can return the equipment and replace it with new, either during or at the end of the agreement.
Why should a customer lease equipment, rather than buy it?
Leasing technology equipment makes economic sense. It gives you use of the equipment for as long as it's useful to you. Rather than paying for three or four year's use up front, as you do when you buy, you spread the payments over the useful life of the equipment. Also you can expense the payments and you have the flexibility to acquire the latest technology when you need to.
How popular is equipment leasing?
Computer leasing began over 50 years ago. Organisations have been leasing or renting copiers for decades. PABX's have been rented since the early part of last century. Mobile phones have been rented for nearly 20 years - most people do it without thinking twice about it. Leasing technology is a sound, cost effective business strategy, freeing valuable capital to generating more profitable returns for the business.
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