Online dating has made it easier than ever for us to connect with other people, but it has also made it easier to avoid going all in on a relationship, even when it offers us everything we are looking for.
Take, for example, these two dating profiles.
Sounds like a match made in heaven, doesn’t it? With so much in common, they could be on track for the fairy tale ‘happily ever after’. That’s why it’s such a shame to think that, because of outdated misconceptions, technology providers don’t always end up with a finance partner.
Finance is the perfect partner for a technology provider, but the love is often unrequited. While tech providers may dabble with finance occasionally, it’s nothing serious. Of course, if they don’t get any better offers, finance is there to fall back on, but for the most part they are unwilling to confirm their relationship status.
The sector has regarded finance as a dirty word for many years based on the belief that mentioning it as a payment option could cause offence to a customer. Surely a customer would only use finance if they cannot afford to pay for their technology upfront? Of course, technology providers have always used finance solutions in their sales strategy, but typically only when requested by a customer.
While this reactive “if and when” approach to finance for technology has been common in the past, it is no longer relevant in the modern world, and it is certainly not the future.
Society is changing, and not just because of COVID. We are more comfortable with the idea of spreading everyday costs via finance, from shopping for cars and furniture to buying clothes online. In a post-COVID economy, businesses want to spread costs, and are less prepared to part with a big chunk of cash if they don’t need to.
Combine all this with the fact that businesses live and die by the quality of their technology, and to stay competitive they need to refresh and upgrade regularly, and the result is a growing demand for finance solutions in the technology sector.
Why do customers choose to pay for tech on finance?
Despite the misconception, it’s often not because they cannot afford to pay upfront. In fact, many cash-rich businesses choose to lease their technology as it enables them to:
- Spread the cost of depreciating technology in line with its return and useful life via a manageable payment plan.
- Keep cash in the bank so it can be put to work for the organisation rather than tying it up in ageing assets.
- Bring projects and growth forward by getting the technology they need without budget constraints.
- Reduce reliance on primary funders and access specialists banks they often cannot access directly.
- Refresh their technology every 3 years, and return the old so it can be reused or recycled.
- Lock in software subscription costs, that would otherwise increase annually, for the duration of the lease.
AND…For private sector customers, leasing provides a highly attractive, fully 100% tax deductible solution. Clients subject to higher tax rates, such as professions, have an even greater benefit available.
Customers want and expect to be able to pay on finance, but what does the provider get out of it?
What does the tech provider get from the relationship?
More and more providers in the technology sector are responding to this shift by proactively offering finance as a payment option for their customers. By doing so, they are not just meeting demand, but also unlocking significant benefits for their business.
Do your customers have problems paying for their technology equipment or projects? Do you find that customer deals fall through for due to their cashflow or budgetary constraints? Offering finance as a payment option can provide a solution to those problems and enable your business to:
- Overcome customer cost objections, as £300 per month sounds much more appealing than £10,000 upfront.
- Increase order values, as customers typically spend 30% more when they lease compared to using capital.
- Protect margins, as customers lose sensitivity to unit costs when presented with a total cost per month.
- Retain customers as leasing makes renewals much easier than when dealing in cash transactions.
- Differentiate yourself from your competition and add value to your proposition.
- Enhance your cash flow as payments are made within 48-72 hours of the agreement being made live.
- Remove the risk of not being paid by the customer as you are paid by the bank upfront.
- Develop more strategic relationships with customers by getting involved with longer-term investment plans.
Happily ever after
More and more technology providers are moving away from the old-fashioned idea that finance is the topic-that-must-not-be-named – unless the customer brings it up first. They are opening themselves up to the fact that the way customers want to buy is changing. They are committing to finance as a routine part of their sales strategy, making it clear that they can tailor payment options to their customers’ needs, and enjoying the benefits that come with it.
Ready to swipe right on making finance work for your business?
We’d love to be your finance partner
Bluestone Leasing is a leading independent finance provider with access to more than 45 funders, and we pride ourselves on our ability to make finance simple and accessible. Here’s how it would work:
- You include a finance option on all your quotes – we’ve got lots of tools to help you do this.
- If a customer is interested in finance, all we need from you is a copy of your quotation and the customer contact details.
- We speak to the customer and make sure all their questions are answered. If they want to go ahead, we secure the credit quickly for them with no fuss.
- We raise the documents, get them signed face-to-face, issue invoice instructions to you, and then get you paid 48-72 hours after everything is delivered.