The Dealer Cash Flow Impact of the Finance Offering

  March 14, 2018

  Read Time: 1 min 30 sec

“Cash flow is not just a thing. It’s the only thing.” – Principal of a $114 Million Office Products Dealer

Over time, you’ll hear finance companies speak ad nauseum of the importance of selling a payment for your equipment – even leading with one. And motives aside, businesses will generally buy more things if they have more cash to do it. Financing is critical to achieving success here. But what about YOUR cash flow? As a dealer principal, cash flows are the life blood of success just like it is for your customers. So, how does your finance offering impact YOUR cash flows?

According to industry statistics, the average office product sale is made on credit terms and takes an average of 36 days to fund into your account. Once a customer chooses your finance option, the average finance program funds the total amount of the sale into your account in an average of 11 days, with some providers funding as fast as the next business day. Notice the phrase “total amount of the sale.” Often when equipment is not financed, items like delivery, installation and other services can further stretch the receivables cycle.  But, the right finance program can include all of those “soft costs” in the faster, up-front payment.

Getting your money three or more weeks sooner (on average) can have several advantages.

  • Lower inventory carrying costs, including interest rate expense
  • Less time collecting receivables – a highly labor intensive and relationship sensitive effort
  • Increased operating cash levels to more easily make payroll and/or pay commissions faster – creating a competitive advantage recruiting hard-to-find sales talent
  • More capital availability to finance inventory and potentially deliver customer orders faster without additional cost

But finance programs don’t just impact cash flows on the back-end, they heavily impact revenue growth.

But finance programs don’t just impact cash flows on the back-end, they heavily impact revenue growth. As previously mentioned, the more your sales organization can simply and easily offer customers equipment, technology, service, delivery and installation with a simple monthly payment, the more you sell. But more cash on hand can also lead to an increase in marketing dollars that can further aid revenue generation or investing in new geographies or capabilities. In all these areas, the finance program becomes a high ROI activity for the amount of real dollars invested that drives additional cash flows and growth.

At LEAF, we help dealer principals with far more than a simple finance program for your equipment. We make your equipment easier to buy with customized solutions that solve real problems – like increasing the amount and velocity of your cash flows. To begin a discussion, contact your LEAF Account Champion today.

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