Customer Finance Programs Key to Increasing Sales

While studies show that technology spending is once again on the rise, there’s a reason you haven’t heard a collective sigh of relief from the software industry. While many budgets are once again allowing for the purchase of enterprise software, hardware and peripherals, there’s no question that today’s purchasers are smarter, savvier and more selective than ever.

Even though the purse strings have loosened, competition is at an all-time high. It’s no longer enough to provide a software solution that meets the potential customer’s needs, or even to provide it at the best price. Today, smart vendors are constantly looking for ways to stay one step ahead of the competition.

While increasing sales is always part of a competitive business strategy, software development companies often overlook a simple method of accomplishing this objective – making it easier for customers to buy.

One option increasing in popularity among software vendors is to establish a customized finance program that provides no-hassle financing solutions for your prospective clients. In addition to “one-stop shopping,” your customers can reap the other benefits of financing that make it easier for them to commit to technology purchases, including:

100 percent financing — Many finance companies offer 100 percent financing for the cost of software and maintenance contracts, which requires no down payment. Because customers don’t have to come up with a down payment, they can make a purchase immediately, rather than hold up the sale with a “wait and see” mentality that often accompanies a dip into cash reserves. It also allows your customers to invest more capital in revenue-generating activities.

Improved cash flow management – With software financing, your customers can conserve capital for reinvesting in their business and improve budgeting accuracy through fixed monthly payments. Financing also makes it easy for customers to access multiple-year budgets by paying for the benefit of your software over its useful life.

Flexible payment structures – Customers can optimize project budgets by taking advantage of the flexible payment structures available through financing to maximize the return on their investment. For example, with software financing, customers can ramp up payments to match the revenue generation of a new technology project that is utilizing the software being financed.

While financing provides a clear advantage for the buyer, when a program is well planned, the list of advantages for software developers, distributors and resellers can be even more beneficial.

Improved Customer Relations

As noted above, financing packages add value for the customer by enhancing their buying power, offering greater flexibility and providing convenience. It also increases their satisfaction through the ability to leverage their budget to acquire the total technology solution – which could include software, hardware, service, support, integration and training – rather than only the parts and pieces they could afford through an outright purchase.

Shorter Sales Cycles

On the sales side, any customer who expresses some interest in a product seems like a good lead. However, there are many times when the question of how to pay for the new software prevents the sale from happening. Time lost on dead-end deals can be eliminated when financing is part of the sale, as the ability to pay is immediately considered in the equation. In addition, many finance companies now offer fast, easy credit and documentation processes, so you can complete a sale quickly and avoid costly processing delays.

Another benefit is that as software needs are being discussed in the sales process, the finance specialist can work with the chief financial officer or accountant to determine which financing option and payment plan best suits business needs and cash flow.

Direct customer financing can also save software vendors millions of dollars each year by reducing the number of days a sale is outstanding. Consider a company with quarterly cash sales of $50 million. On average, it can take 45 days to collect payment. Assuming a borrowing rate of 6 percent, the 45-day lag in payment results in a carrying cost of $371,204. If the same numbers are run with a leasing finance program that generates payment within 2 days, the carrying cost drops $82,253, saving the company more than $288,951 in one business quarter.

The Big Picture

Overall, equipment financing programs can:

Generate larger, more profitable sales faster;

Increase account control;

Improve sales efficiency and productivity;

Lower days-sales-outstanding;

Improve cash flow;

Differentiate your company from its competition; and

Provide complete solutions for your customers.

Taking the Next Step

After identifying an interest in offering flexible financing as part of the sales process, the next step is to develop a finance program. By partnering with an experienced leasing company to develop a finance program for your customers, you can transfer all of the uncertainties of extending terms to your customer to the finance company.

Partnering with an experienced finance company also means you can concentrate on what your company does best – developing software – while letting a finance expert handle the intricacies of a finance program. Put simply, by working with a third party, your company will receive all of the benefits with none of the risk.

Whether you choose to refer your clients directly to your financing program partner or to work with a third-party finance partner to develop an in-house program, it is essential to choose an experienced equipment finance partner. During the sales process, the finance expert will be working closely with your customers, and it’s important that his or her actions and service levels reflect your company’s ability to meet your customers’ expectations. When searching for a finance partner, look for a company that:

Is flexible and willing to work with your management team to develop a program that will meet your financial objectives;

Is experienced in the IT and software finance world, since the sales process, client-decision criteria, and revenue recognition issues are different than that of capital asset sellers;

Provides marketing support and materials to help you promote your financing program

Is willing and able to provide your sales team with materials and training to ensure sales team members are comfortable and easily able to raise financing as an option with their clients; and Is a financially stable, long-term business partner.

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The Benefits of Banks and Their Services

Banks are financial institutions that deal with many different forms of money, finances and investments. Basically, the institution handles transactions that deal primarily with money that its depositors and investors have placed in it. Since there are many different kinds of investments, deposits and dealings that go through it every day, the officials who manage these places usually have rules and stipulations that they adhere to in order to avoid any problems. These institutions have a variety of services that they usually offer their clients in order to make their lives and transactions easier, as well as to be able to turn some profit in the process.

Services
The different services that are offered to clients include, but are not limited to, handling deposits, issuance of checks, trading, credit cards, Internet and phone banking, and foreign exchange. These are the more common things that one might come across when dealing with financial institutions. When clients open a savings account with the financial institution, they are assured of interest for the duration that they leave their deposits in the account. The rate of the interest is dependent on what the banks have to offer, and what kind of account the client has opened. The deposits are also insured for specific amounts, which differs according to each institution. The issuance of drafts or checks is also another service that they extend to their clients. These checks are as good as cash, because the client can issue them to anyone with the backing of the institution as long as there is still a similar amount in the account. Trading is also another thing that many clients are interested in. Many of these places offer trading with stocks and bonds for their clients in order to get bigger returns. Most of the transactions that deal with trading are profitable, but there are also some instances when the trader who handles the account may not acquire the desired results. The issuance of credit cards is another service that banks offer their investors and clients. The person who has been handed these in lieu of cash transactions can use these credit cards. Most of the stores and companies that sell services and products accept payments made through this medium. Internet and phone banking are ways to access one’s account via another medium, which does not require the client or investor to go to the bank personally. These services are usually complimentary from the bank to give their client a lot of leeway with the handling of payments and finances. Banks also handle the foreign exchange of the monies between different countries.

The benefits of dealing with bank usually come with the security that they offer their clients in terms of insurance for deposits, as well as the know how when it comes to foreign exchange and investments. It is also easier to get a loan from banks if one has an account in it.

Finance Accounting Outsourcing Helps to Shed the Workload

The increasing amount of workload on businesses has established a special place for outsourcing in the business market. Be it accounting or bookkeeping or any other work, outsourcing is becoming successful in solving thousands of problems. The matter of outsourcing is concerned with giving your work and responsibilities to the other company. Finance accounting outsourcing is meant to shed off the excess workload regarding the maintenance of accounts. Maintaining the accounts is a very difficult task that has to be accomplished with proper attention. And if you have to handle the other work also, then the accounting work will suffer.

Finance accounting outsourcing will save a lot of your precious time. The time thus saved can be used for concentrating on other matters of your business that need more attention. When the accounting work is outsourced, then you are left with enough time to take care of your marketing division, production division or any other division that reaps more and more rewards. After all, we all do business for earning profits and not suffering losses. Moreover, accounting outsourcing will give you higher quality of efficient work. It is because the professionals at other companies are only concentrating on your work. They don’t undertake any other department.

Usually, the accounting firms give the excess of work to specialized companies that can handle them easily. Finance accounting outsourcing has been considered cost effective also. The expenses of keeping an entire specialized staff for managing accounting work can be more expensive than outsourcing it. You and your accounting firm will have to manage the salary and various allowances of the employee. On the other hand, you don’t have to give any allowance or higher salaries to the outsourcing companies. You just have to pay them a fixed amount for carrying out your task that can be less than your other expenses.

Finance accounting outsourcing is the best way to improve your efficiency. The excess workload can hamper your progress. It is because you will not be able to give enough time to other areas that call for appropriate attention. The main disadvantage of working under pressure or with excess of workload is that you tend to suffer losses. You may gain control and hold over the problems and their timely solution. Accounting outsourcing or any other type of outsourcing will enable you to save a lot of time that can be spent in solving the matters of other aspects of your business.

The process of finance accounting outsourcing involves giving your work to the third party, with the help of an accounting outsourcing firm. The main aim of adopting such method is to free you from the burden of overload of work. An important aspect of accounting outsourcing is that your work can be done in the half the time as compared to the work done in house. The reason behind this is that the outsourcing firm specializes only in such type of work and there is other workload on your employees also. Even the quality of work will be much better than the in-house employees.