As an equipment supplier, there is nothing you want to hear less than, “we can’t afford this”; it is one of the fastest routes to a lost sale. Offering SME customers a business finance option is the easiest, most efficient way to avoid dreaded budgetary concerns.
Supplier finance (also known as vendor finance), offers practical and affordable finance plans that make it easier to convince a buyer to acquire a product and ensure their long-term satisfaction. But what is supplier financing, and what are the benefits to both you and your customers?
What is supplier financing
Product cost is one of the most significant hurdles that B2B equipment suppliers need to contend with. The best way to alleviate the concerns of your customers is by offering finance and leasing options.
Supplier finance is the most efficient way for you to offer finance without having to deal with the stress or inherent risks of the process.
In the simplest terms:
- The customer approaches you wanting to buy equipment, but they do not have the up-front capital.
- You offer finance options through your supplier finance provider, offering an affordable monthly/quarterly rate for your products.
- Your supplier finance provider then does all the legwork, ensuring that the customer can afford the repayments.
- Once all relevant documentation is completed and the goods have been delivered/installed, you receive full payment of your invoice, and your supplier finance provider takes on all risk, taking regular monthly repayments from the customer.
What are the business benefits of supplier finance?
If you are looking to sell B2B equipment of any type, be that computer equipment through industrial machinery or anything in between, there are myriad benefits of supplier finance to your business.
Get your money up-front & improve cash flow
All approved supplier payments are processed by Faster Payment, meaning you could receive cleared funds almost immediately on the same day that your invoice is processed. No dealing with spotty repayments or chasing invoices from customers; you get the full amount in your bank account, allowing you to use your capital immediately.
Sell your products more easily
Many sales fail due to budgets. Having a reputable supplier finance provider on your side helps to alleviate the concerns that potential customers may have.
This makes it easier to sell your equipment, as:
- Repayments are manageable, providing peace of mind to the customer.
- Your finance provider helps to bolster your reputation.
- The customer is reassured that all financing is handled by a specialist.
Unlock upsell opportunities
In addition to making the initial sale easier, supplier finance also provides unique upsell opportunities.
As your customers no longer need to worry about finding large amounts of upfront capital, and they can instead work to a monthly/quarterly repayment budget, it can be significantly more achievable for customers to access higher-end models or increase their total order value.
Retain customer relationships
As your customer is paying for your equipment every month, and using your equipment every day, it stands to reason that, as their term end approaches, you are the first business that they’ll think of when it comes to either upgrading or purchasing new equipment.
Not only this, but as you know exactly when their finance term will finish, you can remain in touch with the customer throughout, encouraging repeat purchases in the future.
How do your customers benefit from supplier finance?
The benefits don’t end with you, however. Your customer also enjoys a variety of benefits as a result of supplier finance.
Upgrade equipment when necessary
Some businesses feel like they are stuck with out-of-date equipment as a result of poor cash flow.
By offering supplier finance, you’re providing a unique opportunity for your customers to upgrade their equipment at the end of the term, allowing them to continuously grow and meet their business goals.
No major upfront costs
Your customers’ finance agreement usually begins with just the initial payment. There are no significant fees, meaning that your equipment becomes immediately accessible to a broad spectrum of businesses.
Regular, predictable payments
As all payments are pre-agreed and are completely regular, your customer can effectively budget for repayments as they know exactly what is coming out each and every month.
By spreading the cost of equipment, your customers can dramatically improve their cash flow.
100% tax deductible against company profits
One of the best parts of of offer equipment finance options for the customer? Finance lease rentals can be 100% tax deductible against company profits, another serious benefit to your customers’ cash flow.
Choose the best supplier finance solutions in the UK
At Shire Leasing, we understand that, as an equipment supplier, there is a growing pressure on your business to offer premium finance options to your customers, especially for larger equipment orders.
Businesses across the UK trust our supplier finance solutions. We are market leaders, boasting one of the biggest and most accomplished offerings in the country.
Take advantage of our own book portfolio, in-house underwriting, and panel of funders. We have wide-ranging expertise, an extensive network and competitive rates, allowing us to advise and supply on all of your supplier finance needs.
Get in touch with our highly trained industry specialists today. We are on hand to answer any questions you may have.