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10 Years in the Cloud

Leases

Equipment Leasing and a Bumpy Ride Coming at Us

I can't keep track of the price increases,  especially when it comes to fuel and food.  Probably the most essential staples of our daily lives.

The Fed is set to push a rate increase of 1% sometime next week.  I guess I'm kind of fortunate because that increase will coincide with the end of my month.

I don't have time to reflect about how the rate will affect me.  I need to address how the fed increase will increase my sales, and increase my GP.  I have a statement up on my wall that reads.

"I'd Rather Manage My Life, Than to Let Life Manage Mine"

Once I had wind of the increase,  I put a couple of calls out last week and was finally able to speak to my Lease Guru today. My Guru was in hiding the four months because of a special project that is finally completed.  Anyway it was great to connect again.

One Percent

"With the one percent increase from Fed this month, how will that affect my existing lease rates?", was the question I posed to my Guru.  I shot out a number before of .50 cents per thousand before he reached for his calculator.  Fifty cents per thousand is .0005, which means if your existing lease rate is .0200, then the new rate factor will be .0205.  That means the interest in the new rate factor will cost a client 50 cents for every $1,000 borrowed each month.  A deal for $15,000 will cost the client another $7.50 per month.  Over the 60 months the cost adds up to $450.00.  Okay it's not that bad, but what about if you have ten copiers ready to drop in the next couple of weeks or months?  That increase is a cool $4,500 increase.

By the way after my Leasing Guru finished with his calculator he told me the increase in the rate factor will be .00053. which is fifty-three cents per $1,000.

My point is that you (we) need to make our client(s) aware of how much more they will pay of they wait. No one, yes no one wants to pay more.  This is a great way to turn a bad think into a good opportunity NOW.

Personally, I've never seen rates that I could remember this high. Keep reminding the clients of these three items.

  • Two to Three fed rates hikes to happen this year
  • Spell out what the increase will cost them if they wait
  • Leasing is a hedge against rising inflation
  • Section 179, it's not to early to take advantage of this NOW
    • Many MFPs are three to five months on back order (It's almost month number 8 of the year)

Add Another Line To Your Proposal

Add a disclaimer that we can't hold financing quotes for more than 30 days, in fact put a line in about the impending Fed increase and that you will have to re-quote. Many leasing companies have lowered the time on their approval from 90 days to 30 days.

-=Good Selling=-

The Last Day and the First Day of My..........Quarter

Pretty cool date today.  The last day before vacation, the first day of the new quarter and my first order for new quarter would be a great start the last day of vacation and the first day of the quarter, right?

My first appointment I thought would be  wishy washy as best with an existing account.  Seems there was an new Chief IT director with my account. I had the ominous email a week to ten days ago asking for all sorts of info on their copiers. When I get that type of email it's usually not one of those great appointment.

Rather than conducting the meeting first and then organizing the date for the client.  I opted to organize all of the data points that they required in a spreadsheet aka dashboard and then scheduled the virtual meeting. I wanted to be ready because many of these appointments can blow up and I wanted to get this done quickly since I had things to fry before my vacation.  Thirty minutes before the start of the virtual meeting I emailed the spreadsheet aka dashboard of the 12 devices with our fleet.

The Meeting

I wasn't ready for the immediate response when the client thanked me for the following.

  • Answering his email to schedule a review of their devices
  • Scheduling a meeting to review the fleet of devices within a week
  • Emailing the dashboard of device with lease start, lease end, monthly payment, device #ID, model number term of lease, lease term date, cost per page for black and color, along with last billing for cycle with pricing

My client explained that this he was rather new with the company and there are two fleets from different vendors (one of them me) and he needed to get a handle on all of the devices as soon as possible to he could get his plan in place.

My client then told me that the other vendor is for a Canon fleet and he's still waiting for someone to call or email him back after two weeks. I could tell he was impressed with the response and the how detailed the information was.

I'll take a trip back to the ominous email because in most cases I've been on the end that is told that changes are being made.  That was my gut, however I did the work because that's my job.  We need to do the work from start to finish even if the outcome is not what we wanted.

After the review, my client picked out one of the locations that had two devices and a pretty hefty volume with both leases terming in the next 3-10 months.  It went something like this, "he's what I want, I want redundancy at all of my locations  so let's start with this one. Where I have the one 60 ppm color, give me two 50ppm color MFPs and while we're at it also replaced the 30 ppm color as well."

Well, that was stunning, and also a nice bonus to happen the first day of the new quarter and the last day before my vacation. It's a verbal and I know that verbals are not set in stone, but I got him all the docs that he needs in order to move forward when he hits the office in the AM tomorrow.

-=Good Selling=-

Four Bad Leasing Clauses I Ran Across This Week

In the last few days I've seen some horrible contracts/agreements/leases that clients have signed for their copiers.  My first thought was to blame the leasing companies for these lame leases, but it's not the leasing companies fault. In fact it's the fault of the dealer because the dealer has the ability to structure many of the t's and c's of the lease.

The Roll Over aka Evergreen Clause

In one case the lease has a roll over clause like most leases do, however this lease has a roll over of one year (12 payments) if they are notified in time.  Note that most roll over clauses are 30 - 90 days of the client does not send a letter of intent to the leasing company.

Some dealers think that this type of clause is protecting them from a competitor upgrading that lease. Clients see it differently as they owe another 12 payments for copiers that are already 5 years old.  The thought of paying another $7K more led the client to make the statement of "I'll pay the $7K but will never do business with them again".  Yikes, thus how did this clause protect the upgrade? The client will upgrade, but with a different vendor. 

My next issue is with the sales person not telling the client that there is a  12 month "roll over" clause in the lease.  Now, I could be wrong about with blaming the sales person because that person may have not read the lease. Thus, how could they inform the client about the "roll over"?  Point of the matter is that "we" as sales people need to read the lease terms, and ask questions if needed. 

These are great questions to ask.  Why is the roll over 12 months, can we kill the roll over if they upgrade with us, what happens if the client does not want to sign the lease with the 12 month roll over, is there something else we can offer?  This may sound harsh but if you're not asking these questions as a rep you are cooking your own goose for upgrades down the road.

63 Month Lease Terms

Did we really need to present a 63 month term?  Why do we have 63 month terms?  Why is it that we are always shooting for lowest possible payment to the client?  Do we present 63 months just because they had a 63 month term?  Think about what we're doing with a 63 month term!  It's bad enough that we'll wait 5 years for the upgrade but what about the extra dollars that the client will pay for 3 months extra?  My plan is simple always quote shorter term leases, start with 36 months and be ready with 48 and 60 month terms.  Let the client tell you they want a longer term.  If the client asks for 63 month term, please explain why they don't want the 63 months along with how much extra they will pay.  Be the consultant and not the sales person. The client will appreciate the recommendation.

Escalation of Lease and Maintenance Costs

In this day and age of where the client can research or find out anything, is there really a need for lease hardware and maintenance to have an annual escalation cost that exceeds 10% each year? This is what I came across this week.  You wonder why many clients hate copier dealers? This has got to be at the top of the list. 

Processing Fee aka Shipping Fee

In addition one of the clients had an annual invoice for shipping and a "processing fee" of $200. I did some checking and this annual charge was also subject to an escalation fee of 15% each year. One cartridge of toner for this device yields 30K in pages, thus the client had to pay $200 to ship two toners!  Next year they will pay $230. Really is this how we do business now?

Clients Want A Unique Buying Experience

We read and hear about this all of the time.  What client wants to be blind sided with addition lease fees?  Explanation of these fees should be conducted at the time the client signs the lease.  I will ask clients if they've ever signed an office equipment lease, and if they say no, I'll explain what the doc fee is and why they need insurance on the lease. Explaining this upfront gives that client some satisfaction since they will not be blindsided with additional fee's on the first invoice. 

It's so frustrating to see leases and agreements like these. If clients were educated on what the pros and the cons of each lease and each maintenance agreement they could make good business decisions.  Seems to me that too clients don't read the t's and c's and this helps to compound the problem of some terrible leases and agreements.

Do you have any horror lease stories?  Would love to hear about them.

-=Good Selling=-

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