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Benefits of LeasingBenefits of Leasing
Equipment Sales Professionals
Leasing as a Sales Tool
In partnership with…
1Q / 2013
Leasing as a Sales Tool
8 out of 10 companies lease equipment
Leasing is a convenient method of financing, preserving credit lines for working capital rather than being tied up in capital expenditures
The use of leasing can enhance your sales volumes and help you keep customers for life
The Benefits of LeasingThe Benefits of LeasingThe Benefits of LeasingThe Benefits of Leasing
The Benefits of LeasingThe Benefits of LeasingThe Benefits of LeasingThe Benefits of Leasing
• Accommodate Budget Restrictions
• 100 per cent Financing
• Ease of Acquisition
• Conserves Working Capital
• Easy Documentation
• Promotes New Equipment at Regular Intervals
• Possible Tax and/or Balance Sheet Advantages
Offer total support: You can offer one bundled solution for equipment and financing, thus simplifying your customer’s decision
Overcome price objections: You can increase sales and enhance profit margins by offering the monthly payment as the financing solution
Control the sale: You maintain control over the acquisition process by providing the full equipment and financing package
The Benefits of LeasingThe Benefits of LeasingThe Benefits of LeasingThe Benefits of Leasing
Sell the Monthly Payment
Rather than quoting an expensive cash price, offer an attractive monthly payment
Cash Priceupfront
Lease per month*
*Based on $100,000 X .02119 60-month lease rate factor
$100,000 $2,119 vs
Which would your customer more easily tolerate?
The Benefits of LeasingThe Benefits of LeasingThe Benefits of LeasingThe Benefits of Leasing
*all rate factors used in this presentation are examples only. Actual factors may differ.
Avoid Equipment Discounting
Offering monthly payment prevents “sticker shock”
Avoid discussing the issue of the equipment cash price, and avoid the necessity of discounting the price to close the sale
It is easier to close a larger sale, thereby increasing your revenue and earning potential
$100,000 $2,119 vs
“Make that $98,000 and you have a deal.”
“Is that all? That’s a great
price.”**Based on $100,000 X .02119
60-month lease rate factor
The Benefits of LeasingThe Benefits of LeasingThe Benefits of LeasingThe Benefits of Leasing
*all rate factors used in this presentation are examples only. Actual factors may differ.
Sell to Your Customer’s Budget A longer lease term will lower the monthly payment
without reducing the price of the equipment
$3,19636 months
Based on $100,000 X .03196*sample lease rate factor
Provide your customer with a quote that fits their budget requirements
A 36 month term is too expensive? Suggest a 48 or 60 month term
$2,51048 months
Based on $100,000 X .02510*sample lease rate factor
$2,11960 months
Based on $100,000 X .02119*sample lease rate factor
The Benefits of LeasingThe Benefits of LeasingThe Benefits of LeasingThe Benefits of Leasing
*all rate factors used in this presentation are examples only. Actual factors may differ.
Use the suggestion of a longer term to up-size your equipment proposal
With term flexibility, you can meet and exceed your customer’s needs
Sell to Your Customer’s Budget
A longer lease term will give your customer more equipment for their money
$3,196
36 months
Based on .03196sample lease rate factor
$100,000
$3,196
48 months
Based on .02510sample lease rate factor
$127,275
$3,196
60 months
Based on .02119sample lease rate factor
$151,988
The Benefits of LeasingThe Benefits of LeasingThe Benefits of LeasingThe Benefits of Leasing
*all rate factors used in this presentation are examples only. Actual factors may differ.
The Benefits of Leasing - Recap
Sell the monthly payment rather than the cash price
Avoid sticker shock and equipment discounting to maintain revenue
Increase sales and revenue through the use of lease term and payment amount
Receive fast credit approval and a timely sale to turn inventory quickly
Present simple lease documentation
Leasing KNOW-HOW for Equipment Sales Professionals
The Benefits of LeasingThe Benefits of LeasingThe Benefits of LeasingThe Benefits of Leasing
Call Curt MacRae20 Division St.
Coldwater, MI 49036 248.238.7214
Now..
Let’s
talk
M
uni
For Municipalities
• Increased purchasing power – Monthly payments may help keep the lessee within its budgetary constraints
• Acquire equipment from various vendors – A single lease can allow the municipality to acquire diverse equipment
• Leasing is treated as an operating expense – lessee may be able to circumvent a budgeting problem / avoid lengthy appropriation process
• Lease payments are all inclusive -- can include installation, maintenance, shipping, training, software
• Lease can be paid off early -- at any time during lease-term
• Flexible payment terms are available -- Leases are from two to five years (or longer for certain situations); payment options include monthly, quarterly, semi-annual, and annual with the option to defer payments until the next fiscal year
• No down payments / advance payments required
• Ownership leases – at end of term, lessee owns the equipment; there is no residual
The Benefits of LeasingThe Benefits of LeasingThe Benefits of LeasingThe Benefits of Leasing
Municipalities and their Budgets –
The great majority of municipalities implemented new
budgets on July 1,and are ready for another year of serving
their public. Across the board the cities, counties, and
various types of districts are facing reduced revenues and
the need to control their expenses and maintain their cash
reserves. Municipal Lease/Purchase financing allows them
to pay for needed equipment over time and that is the
same benefit that we have discussed with commercial
clients for decades.
The Benefits of LeasingThe Benefits of LeasingThe Benefits of LeasingThe Benefits of Leasing
Characteristics of Municipal Lease Purchase Financing • Voter approval not needed.-- funding comes from annual operating budget
• Lease rates compare favorably to Bond Issues when all costs considered • Proves effective for terms under 10 years and less than $10 million.
• Lease documentation is simpler and faster; staff time and soft costs are minimized.
• No additional fees or reporting requirements. • Early buyout options are available.
• Finance only what is needed, with the flexibility of choosing the term required
• Expected useful life of leased property matches the term of the lease
Characteristics of Bond Issues • Need voter approval
• Cost of election and advertising, and issuance measurably affects true borrowing rates
• Appropriate for large issues and for long terms, but may not match capital needs
• Process is slow, consumes staff time and incurs hidden expenses and overhead costs and commits the municipal entity to fixed payments regardless of local economy cycles • Costs continue after issuance (Trustee fees, compliance reports, audit and review fees)
• Restricts future bond issues because of covenant restraints
• Often carry prepayment penalties
• Bond term may exceed useful life of equipment.
Avoid Equipment Discounting
Offering monthly payment prevents “sticker shock”
Avoid discussing the issue of the equipment cash price, and avoid the necessity of discounting the price to close the sale
It is easier to close a larger sale, thereby increasing your revenue and earning potential
$300,000 $5,638 vs
“Make that $290,000 and you have a deal.”
“Is that all? That’s a great
price.”**Based on $300,000 X .018793
60-month lease rate factor
The Benefits of LeasingThe Benefits of LeasingThe Benefits of LeasingThe Benefits of Leasing
*all rate factors used in this presentation are examples only. Actual factors may differ.
The Benefits of Muni Leasing
Sell the monthly payment rather than the cash price
Avoid sticker shock and equipment discounting to maintain revenue
Tailor to municipal budgets and across budget years
Reduce price negotiation
Receive fast credit approval and a timely sale to turn inventory quickly
Present a total solution for your customer
Leasing KNOW-HOW for Equipment Sales Professionals
The Benefits of LeasingThe Benefits of LeasingThe Benefits of LeasingThe Benefits of Leasing
Leasing provides your clients A TOTAL SOLUTION
Sell the monthly payment rather than the cash price
Avoid sticker shock and equipment discounting to maintain revenue
Tailor to municipal budgets and across budget years
Reduce price negotiation
Receive fast credit approval and a timely sale to turn inventory quickly
Present a total solution for your customer
Call Curt MacRae - 248.238.7214 [email protected]
THANK
YOU…
from
248.238.7214www.curtisfunding.com