Vendor Financing: Tips for Manufacturers and Dealers

Industrial equipment manufacturers and vendors are frequently called on to help their customers arrange financing for large purchases. If their only response is to hand out the business card of a preferred bank, this will allow some sales to go through. However, in some industries, it will leave a lot of money on the table. We spoke with NFS Leasing, a vendor financing company, to learn some tips and tricks for avoiding this scenario. Here is what they had to say.

Choose a Financing Company that Will Approve a Large Percentage of Applicants

Customers get frustrated when they’re hot to buy and then get turned down by a bank or financing company. Their eagerness often turns to rage, which is directed at the dealer or even the manufacturer. This leads to bad word-of-mouth, which often causes even more lost sales.

Avoid this by choosing a vendor financing company that will likely approve those with subpar credit. While no financier is likely to approve everyone, some are more flexible than others.

Look for a Financing Company with Variable Terms

Those with lower credit scores are typically used to paying higher interest rates. These rates compensate lenders for the additional risk of taking on this business. However, some companies fail to reduce their rates when a prime borrower comes along, which costs sales. Ensure that your financing company has options for those with great credit and those who are poor.

Alternatively, offer bank financing or other options for your great-credit customers. It is important to ensure they are appropriately served, too.

Know Your Customers' Industry

 Some industries, such as agriculture, are known for having many ups and downs. In these industries, it is often hard for customers to get traditional financing because recent down years affect their credit. These customers will be especially happy if you direct them to a lender who will work with them.

In other industries, business is relatively stable – for established companies. Here, those who need alternative financing are more likely to be start-ups that haven’t yet reached that stage. For them, finding a vendor financier that doesn’t require an extensive credit history is important.

Consider Offering Leasing Options

 Many industrial equipment dealers offer their machines for sale or lease. One reason is that it can be much easier to get a customer approved for lease financing than for an outright purchase. If a large percentage of your customer base is getting declined for purchase financing despite using a flexible lender, it may be time to add leasing to your options.

More information about vendor financing and vendor leasing can be found at NFS Leasing.

About NFS Leasing

NFS Leasing has originated over $1 billion in leases since its inception. Uniquely, it started out with one person refurbishing computer equipment – in his garage. It didn’t take long for him to see the value in offering financing, and over time, the business became dedicated to this service. Now, NFS is solely focused on bridging the gap between business owners' dreams and financial reality.

Contact Information:

NFS Leasing, Inc.

900 Cummings Ctr Ste 226U
Beverly, MA 01915-6181
United States

Ashley Whyman
(866) 970-4637
https://nfsleasing.com/