Whether you are in the business of manufacturing and selling equipment, or are a buyer of expensive equipment for your business, asset finance could play a key role in helping you achieve your business goals. Too often, banks are seen as one-stop-shops when it comes to finance needs, but the reality is that there are other, potentially better options. Anthony Roberts, Managing Director of specialist asset finance provider Eclipx Commercial, explains how the use of asset finance can have a far-reaching impact on the growth, and ultimate success, of your business.

Eclipx Commercial recently commissioned independent research house East & Partners to delve into asset finance in Australia. Who uses it? Why do they use it? And ultimately, does asset finance offer any tangible benefits to businesses selling equipment or businesses buying equipment?

We started by looking at small and medium businesses’ overall access to the funds they need to grow, both in terms of the availability of funds as well as the time it took for approval, and moved on to the specific pros and cons of asset finance. Some of the results, which can be accessed at Eclipx Commercial’s website, were surprising.

Equipment manufacturers and vendors stand to benefit substantially if they offer equipment finance to their customers. Over 90% of equipment manufacturers said they sold more if they offered finance as part of their sales package, three-quarters (75.5%) said they could close larger deals, nearly 64% said they closed deals more quickly, and most importantly, 80% said they forecasted higher growth, compared with businesses which did not offer equipment finance.

Moreover, the cash conversion cycle, a metric often used to give an indication of the health of a business, was significantly reduced, from the 210 days averaged without equipment finance, to 159 days – a saving of 59 days.

In fact, our research revealed that equipment manufacturers and sellers offering equipment finance reported a significantly higher one year forecasted growth rate of 5.9%, compared with 3.3% for businesses not offering equipment finance. Over a period of three years, the gap grew even larger – 18.2% forecasted growth for businesses offering asset finance compared with 10.2% forecasted growth for those that don’t.

For your customers, the arguments for asset finance are just as strong. Most small and medium-sized businesses who use expensive equipment, or technology that needs upgrading regularly, struggle to fund their requirements with upfront capital outlays. They have the option of going to the bank for a loan, but since the credit crisis, many businesses are reporting that banks are often unwilling or unable to help.

Yet investing in your business is essential for growth. Again, the research bears this out – 87.4% of buyers say that equipment finance has been essential to their ability to grow their business, so it makes perfect sense for equipment vendors to give them what they need.

Three reasons you should consider partnering with an asset finance provider

  1. Offering finance as part of your sales process reduces uncertainty, removes buyer complexity and differentiates you from your competitors. When buyers are doing their research, both online and via traditional methods, they will have access to endless information and advice, but will not have certainty of outcome. If you can offer finance as part of the sales package, you will be providing certainty of credit.
  2. Offering finance can improve your margins. Discounting and price wars are just a race to the bottom, where no one wins. The reality is that your customers are far more likely to consider higher quality, better specified (and therefore expensive) options, when it comes to business-critical equipment, if you can offer a plan (which could include service) spreading the costs over several years.
  3. Higher sales volume, business growth. The figures don’t lie. Equipment sellers offering asset finance report significantly higher forecasted growth than those which don’t.

The bottom line is that asset finance reduces wasted opportunities – on both sides of the fence. Our research showed very clearly that without asset finance as part of the sales process, both equipment vendors and their customers are missing out. Vendors are missing out on larger and more profitable deals as well as better overall business growth, and customers are missing out on the equipment they need to grow their businesses.

The trick is to partner with an asset finance provider that is invested in your success. Choose a finance provider who focuses on long-term relationships rather than single transactions, has the sector and business knowledge needed to bring insight and professional advice to your conversations, and has a track record of productive long term partnerships.

With the right asset finance partner, you can expect to see your and your customers’ businesses go from strength to strength.