A contractor in San Bruno asked, “How does financing help customers get to a ‘yes’?”
One of the most common dictums to contractors is simple: Make sure you offer financing on every single job. But why? There are a few compelling reasons why this is a universal best practice for all contractors, no matter what types of businesses they’re serving.
First and foremost, many nonprofits and small and medium-sized businesses are often low on cash reserves. They may have the need for new equipment, and perhaps are even in a positive financial position, but simply don’t keep that kind of liquidity on hand. All the more so for businesses that may be recent startups, struggling financially, or have recently undertaken other expenditures; a single, five- or six-figure investment may be out of reach, whereas three- or four-figure monthly payments could make more options and price-ranges accessible – rather than boxing the client into the cheapest, likely least-efficient option.
Moreover, energy efficient equipment, which tends to be more expensive, will generally save the buyer money on utility bills over the lifetime of the equipment – often representing a net cheaper investment over the course of many years. Using financing instead of one lump payment allows the buyer to balance the greater expense of high-efficiency equipment now with higher utility savings over the coming years.
Even bigger businesses and wealthier organizations can benefit from financing. While there’s a myth that those without money take advantage of financing, the reverse is often true. Successful businesses and individuals often can make substantial returns on investments, making those a better use of liquid cash — which makes financing more attractive. For example, why spend $50,000 up front, when you could break it up into monthly payments of $1000 month with 5% interest and spend the balance on an investment that yields 7, 8 or 9% returns?
So now that you’re ready to convey the value of financing to your customers, how can you get them on the same page? Here are a few helpful tips:
- 1. Mention financing early and often – before your visit, in your advance communications and included on all presentation materials.
- 2. Focus on the monthly investment of the financed project, rather than the total, lump-sum cost.
- 3. Include estimated monthly payments of the financed project on your official bids.
- 4. Do your research in advance, and know which financing providers are the best fit for your customer based on what type of business they are, how big the project is, and other factors.