I’m sure you’re aware of the school of thought around specialization — be the very best you can be at one specific thing. How successful was Michael Jordan at baseball, anyway? In fact, we preach this about First Business Bank: we are not a bank for all businesses or all individuals. Many successful manufacturers narrow their focus, create a reputation, build a brand, invest in technology, and are very successful.
However, there’s still room within that business model to consider lucrative opportunities, even if they might feel like a bit of a stretch. Specifically, we’ve helped manufacturers boost their sales significantly by helping them provide client financing. Current tax rates, bonus depreciation, and leasing accounting standards make it a very good idea for many manufacturers to consider it.
How Customer Financing Benefits You & Your Customers
Manufacturers often overlook the potential to differentiate themselves with their customers by remaining present in the financing process. The key is knowing each of your customer’s short- and long-term goals and tailoring the financing to them. Who would not like this level of service in any large transaction?
Say you make backhoes, and you have a potential buyer — a construction company. That company goes to a dealer to arrange pricing of the sale and goes to a bank to secure financing. The dealer and the bank actually work against your best interests as they each maximize their end. Staying in the game creates a favorable situation in which the dealer and the lender are working with you to improve the client’s outcome.
Playing this role in the selling process is far more important than providing the convenience of available financing. Your clients can have the financial package tailored to their unique needs – for instance, matching the timing of their cash flow with the payment structure. The proprietary process at First Business Bank allows us to offer same-day approvals, so you have confidence that you can reliably close more sales when customer motivation is high. Further, we will work with you to get more clients approved for financing. No more losing out on sales in the moment as they work to secure financing.
Providing Customer Financing Improves Relationships
If you’re still not convinced, you can do your own research. Ask your customers whether or not they enjoy negotiating separately the terms of purchase with the supplier and the financial terms with the lender. You likely will get answers across the board: there’s no consensus about the smartest way to finance, primarily because each customer has a unique set of financial conditions and goals.
And don’t forget that you’re also often a customer – you could be working with a manufacturer who could better represent your needs through customized financing solutions.
For example, if a family-owned company wants to sell within the next ten years, its financing desires are very different from one that is growing as fast as possible. When you get to each customer’s underlying financial needs, that information is crucial to helping you generate incremental sales and promoting loyalty. It’s highly unlikely that your competitors are trying to match the lifetime acquisition cost for a purchase with their prospective customer’s financial needs.
If this sounds intriguing, or if you already offer financing but are interested in other options, let’s start a conversation about how your specific company can benefit.