Equipment Leasing Brings Numerous Advantages to Manufacturers Moving to Fork Truck Free Environments

June 24, 2016 0 Comments Fork Truck Free Info 1707 Views

The Equipment Leasing & Finance Association (ELFA) noted that there are numerous reasons equipment manufacturers and vendors offer financing to their customers. Topper Industrial, the national leader in industrial carts and leader of the North American Fork Truck Free movement concurs with ELFA findings.

Leasing drives customer retention because offering financing strengthens customer relationships while addressing customers’ financial issues. It allows an extra step to answer questions about the equipment in defining a rapid return on investment. Leasing conversations allow companies like Topper Industrial to help customers plan long term strategies.

Providing incremental income is an outcome of leasing by proving a financing option which facilitates equipment sales, generates additional revenue and benefits. Topper has found that offering financing helps customers save money.

Because of the manufacturer’s knowledge of the equipment and ability to resell pre-owned equipment, the manufacturer may be able to take additional risks on the residual value, which lowers the customer’s monthly payment.

Topper has been able to get customers better leasing terms. A customer will purchase equipment that might be otherwise delayed because of financing, and are able to provide better financing terms.

When a customer takes advantage of leasing/financing, it eliminates the risk of the customer owning equipment that is technologically obsolete.

ELFA reported that among manufacturers who offer financing for their equipment, approximately 30% of all equipment sales are financed by the manufacturer or its finance partner. That rate is increasing each year as the financing division plays a more important role in the overall strategy of the company.

Of all manufacturers who offer a financing option to their customers, 67% expect equipment financing will increase as a percentage of their manufacturer sales (source: Captive Finance Firms in a Challenging Economy, Equipment Leasing and Finance Foundation).

ELFA also identified some of the major reasons industrial manufacturers seek leasing options.

Get 100% financing with no down payment; unlike requirements of most traditional lenders, industrial customers may be able to arrange 100% financing of equipment with no down payment. This is key if cash flow is a concern to an industrial business.

Equipment financing is a source of funding that allows manufacturers to hold onto cash, or working capital, so it can be used for other areas of business, including expansion, improvements, marketing, or R&D.

Often leasing allows those initiating a fork truck free environments to manage risk. Equipment financing can help mitigate the uncertainty of investing in a capital asset needed by a business until it achieves a desired return, increases efficiency, saves costs, or meets other business objectives.

Leasing allows manufacturers the ability to hedge against inflation. Equipment financing may hedge inflation risk because instead of paying the total cost of equipment up front or with a large down payment in today’s dollars, the stream of payments delays outlay of funds. Additionally, either a lease or loan can lock in the rates that exist on the date of the closing. In other words, the finance company absorbs the devaluation of payments over time due to inflation and other financial risks.

Seasonality and business cycle fluctuations are particularly frequent in manufacturing. Financing equipment helps maintain cash flow and greater certainty in budgeting by setting customized rent payments to match cash flow and even seasonal cash flows.

One of the forward-thinking factors in leasing is the ability for manufacturers to keep up to date with new technology. Leasing enables industrial leaders to acquire more and better equipment than without financing. Certain leasing finance programs can also allow for technology upgrades and/or replacements within the term of the lease contract. When a lessor owns the equipment in a true lease, the lessor bears the risk of the equipment used by a business from becoming obsolete.

Tax-oriented leases should produce lower rents since the lessor retains title and depreciation. A tax-oriented lease is a transaction that includes the value of tax benefits. Conversely a conditional sale or loan enhances tax benefits of higher deductions to the lessee/borrower.

It is for these reasons and the request of Topper Industrial customers that a new, deeply discounted leasing program was launched. Learn more at: www.topperindustrial.com/leasing

 

 

Topper Industrial

Article submitted by Jillian Burrow, Marketing Manager for Topper Industrial

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