Recession? What Recession?

Visual of Thriving During a Recession
Visual of Thriving During a Recession

Recession? What Recession?

Steps to Prepare your Business for an Economic Downturn

Is there going to be a recession in the next 12 months? Are we in a recession now? Experts offer conflicting views. Fed Chair Jerome Powell says “he doesn’t think the U.S. is currently in a recession. … There are too many areas of the economy that are performing too well.”

Ellen Zentner at Morgan Stanley says, “the probability of a recession in the next 12 months is about 30 percent, according to the bank’s models.” Bank of America and S&P Global Ratings puts the probability of a recession at 40%.

Then there’s the discussion of what constitutes a recession. Experts are divided on this as well. However, as a business, you know when your business earnings start to drop. No matter how an economic downturn is labeled, if it impacts your bottom line, you need to take action.

Here are some ideas on how prepare for and thrive during an economic recession or downturn:

Have a Financial Plan

Don’t wait until you are in the middle of a recession to put together a plan. Put together a company plan now. It will help with guidance on how to successfully navigate the recession and keep the company from having a knee jerk reaction and possibly costing the company long term.

Emergency Fund

If you are an individual, you are urged by financial gurus to have an emergency fund. It’s good advice for businesses too to have enough working capital on hand to weather any economic downturns. Have enough cash on hand to handle anything that arises during a downturn.

Cut Out Unnecessary Costs / Numbers Don’t Lie

Take a long look at your budget. Are there expenses that aren’t bringing in an ROI or you know just aren’t working. Cut them from your budget. Even small items can add up. Take a look at the corporate credit cards. What expenses can you prune? It’s amazing how many items get paid for and then either never used, or used and then forgotten about.

Cut back on discretionary spending such as travel, high-cost lunches, etc., unless the spending is related to ROI. Obviously, if trade shows bring in business, you would not want to cut back on those. But a lot of your discretionary spending can be pruned.

Don’t preemptively cut staff. In past recessions, companies that reduced their staffs because of a recession took years to come back because of the loss of key company and business knowledge. Instead, use this as an opportunity to update and train your staff. Studies have shown that companies that invested in themselves and their employees recovered quickly after a recession. Also, the pandemic changed employers’ recession strategy. Because so many employees never went back to their pre-pandemic jobs, employers want to hold onto good employees. It’s easier to keep good employees than to find them.

In HBR’s, “Roaring Out of Recession,” companies that had “layoffs may reduce costs quickly, they make recovery more difficult. Companies run the risk of scaling up too late, especially if hiring is more difficult than they anticipated. People are loath to work for organizations that reduce head count in difficult times. Moreover, as these companies rehire, costs shoot up.”

In Roaring Out Recession, it states, “The CEOs of pragmatic companies recognize that cost cutting is necessary to survive a recession, that investment is equally essential to spur growth, and that they must manage both at the same time if their companies are to emerge as post-recession leaders.”

Keep investing in your Business / Prepare for the Bounce Back

Companies that continue to invest in marketing and advertising come back faster from a recession. Recessions are a good time to update your technology, train your staff, etc. Many types of technology, such as ERP Systems, IT Systems, etc., reduce your costs and increase efficiency. By investing in technology before or during a recession, you can use technology to reduce your overall corporate costs.

Finance Large Purchases Over Many Years

Instead of reducing your working capital, finance large purchases for up to 5 years. While recessions can last this long, it’s highly unlikely that any 2022 recession would still be ongoing in 5 years because of the causes of this potential recession and the low unemployment numbers.

Focus on Long Term Goals

Think long term. Knee jerk reactions can cost your business money and personnel in the long run. See past this quarter or even this year. Plan for the future. What you do today can have a big impact for many years to come.

Look for creative ways to increase sales

If your company is hit particularly hard by a recession, look for creative ways to make more money. Tap the resources in your company to possibly expand your product offering or to creatively reposition your products to meet the moment.

Keep in contact with your customers

It’s easy to become cocooned during a recession. Instead, stay in touch with your customers. Maintain good relationships even if they can’t afford to purchase from you at this time. Reach out just to check in. They will remember who stood with them when they were experiencing problems.

Upshot

We are getting plenty of warning of a potentially upcoming recession. It’s really important to take steps now in order to be prepared.

If you are contemplating the purchase of big ticket items and want to save your working capital, we offer equipment financing, technology / IT financing, including software financing. Instead of a large outlay of cash, make fixed monthly payments over the lifetime of the asset up to 60 months. The Fed is likely to raise rates again in September so finance now before rates increase.

If you are an equipment, technology or software vendor, offering financing to your customers can allow them to purchase assets they need for their business while making low monthly payments. You get paid upfront. It reduces the impact of any economic downturn on your business because your customers can afford your products, even during a recession.

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Dimension Funding Has Paperless Financing

Paperless Office for Financing Company
Paperless Office for Financing Company

Dimension Funding Has Paperless Financing

A Fast & Easy Electronic Financing Process

As a business looking for a way to increase efficiency and ease of use, Dimension Funding has a paperless financing system. We offer an online financing application and process. When it comes time to sign the documents, all of the documents are digital and signed through DocuSign. This makes the process more secure and fast & easy.

Because all of the documents are digital, vendors and borrowers have quick and easy access to appropriate documents.

Obviously there are some exceptions to the “paperless” rule since every financing situation is different. But our primary financing process is entirely electronic.

Environmental and Corporate Benefits of Going Paperless

In addition to the benefit to our customers and vendor partners, there are environmental and corporate benefits to going electronic as well.

On average, each person in the US uses 500+ pounds of paper with 40% of the world’s industrial logging focused on paper production. That’s an incredible amount of paper being generated that much of which can be replaced by electronic documents.

According to the Paperless Project, the cost to maintain a filing cabinet per year is roughly around $1,500 with an average cost to file a document of $20, $125 per misfiled document, and $350 for every lost document.

Our carbon footprint is decreased because we are no longer using reams of paper, filing cabinets, etc. In addition, documents are readily accessible. No more looking for a misfiled document.

Not only does it help the planet to go electronic, but it can save companies a substantial amount of money from not wasting time creating, shuffling and attempting to find papers.

An IDC Survey showed “that information workers waste a significant amount of time each week dealing with a variety of challenges related to working with documents. This wasted time costs the organization $19,732 per information worker per year and amounts to a loss of 21.3% in the organization’s total productivity.”

While Dimension Funding went to paperless financing for the convenience of our customers and to help the environment, a great side benefit was an increase in productivity. It’s a win-win for our clients, the environment and for the productivity of our organization.

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Benefits of a Vendor Financing Program

Benefits of a Vendor Partner Program

Benefits of a Vendor Financing Program

How a Vendor Financing Program helps both the Vendor and their Customers.

Vendors and customers alike can benefit from a vendor financing option. Depending upon the vendor financing program, there are many benefits to offering financing to your customers.

Types of Vendors who can Benefit from having a Vendor Financing Partner

  • Equipment companies. Any type of equipment, particularly large ticket items such as construction equipment, lab equipment, business cargo trucks, security equipment, etc.
  • Subscription software such as ERP or CRM software. Any type of software can be financed over the term of the subscription turning a large upfront cost into monthly payments. In addition, training, implementation and hardware costs can be rolled into the financing as well.
  • Industrial Automation Equipment Providers.
  • Breweries, wineries and brewery equipment companies.
  • Point of Sale companies.
  • Almost any type of manufacturer.

Why Financing Can Help Customers

  • Customers don’t need to find financing on their own. This can reduce the time it takes for a customer to make a purchasing decision. It can also induce a customer to purchase by spreading paying for the equipment or software over the lifetime of the asset.
  • Soft costs, such as delivery and installation for equipment, and training and implementation for software, can also be included in the financing turning large upfront costs into monthly payment.
  • The associated soft costs, particularly for software subscriptions such as ERP implementations, can be much more than the cost of the software itself. By being able to finance it along with the software, it makes it easier for the customer to be able to afford an ERP solution.
  • Financing, especially for small and medium-sized enterprises, means that they can afford equipment to expand, or software for streamlining or organization because it reduces the impact on their cash flow. By having a fixed, monthly payment rather than a large upfront cost, a small business can afford equipment and software that they otherwise might have been able to purchase.

Why Financing Can Help Vendors

  • Providing financing is expected by your customers. It can be a part of your overall marketing strategy.
  • It speeds up the closing of the sale. Because customers don’t need to search for financing but can get it within a day or so of applying, vendors are more likely to close the sale.
  • You are offering more than just a product. You are offering a service and a comprehensive approach to your customers. Vendors who offer a personalized, comprehensive service to their customers are more valued by customers and generate more sales.

Selecting the Right Financing Partner

It’s not just that the financing partner provides financing. A financing partner can be a true partner to a vendor and help to generate sales. A true partner with a comprehensive vendor financing program can help a vendor by:

  • Providing co-branded flyers and print materials that explains financing options and the benefits of financing. These flyers can contain the vendors product information and financing options for their services.
  • Setting up online applications and landing pages which gives the customer a quick and easy way to apply for financing, explains any promotions and helps with converting a prospect to a customer.
  • Provides an app, a “Financing Widget,” that the vendor can install on their website that quickly and easily puts a financing application & a payment calculator on the vendor website. It also provides information on financing options which allows the customer to apply for financing even before they contact the vendor.
  • Maintains good communications with the vendor and helps with responding to changes in the vendor’s landscape.

The pandemic significantly upended many companies’ landscapes. By having a vendor financing partner, companies were able to weather the changes, increase sales and improve relationships with their customers.

Having a vendor partner such as Dimension Funding, who is responsive and actively works with a vendor to help close sales, can positively impact the bottom line of the vendor, give a better experience for the customer and generally improve the purchasing experience.

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Finance Software Training & Implementation Costs

Financing for Software Implementation & Training Costs
Financing for Software Implementation & Training Costs

Finance Software Training & Implementation Costs

Computer software has become an essential part of a modern business’s arsenal of tools. The increase in efficiency and the ability to implement new techniques is game-changing for almost everyone.

While many consumer-grade software packages are very affordable, professional corporate-grade software has a much steeper cost of entry. The costs don’t necessarily stop when you buy the software either.

In this article, we’ll go over why investing in high-quality software is a good plan of action, some hidden costs that you may not have considered, and how financing enterprise software through companies like Dimension Funding is a solution for all of this.

Benefits of Enterprise Software

Software is a very vague term as there are so many different types and permutations but for the most part, most businesses will use some form of specialized software, like Enterprise Resource Planning (ERP) or CRMs.

The benefits that you open yourself up to by choosing software like ERP, CRM or most types of enterprise software are immense:

  • Potentially reduced costs as software can effectively replace or support many different operations
  • Improved reporting and planning capabilities
  • Macro visibility (inventory management, schedules, etc.)
  • Improved efficiency
  • Data security
  • Easier departmental collaboration capabilities
  • Modular Scalability (software dependent)

Again, more specialized software created for a specific type of work will have even more to offer but these are general improvements almost anyone will see by implementing software into their workflow.

The Hidden Costs of Purchasing Enterprise Software

Now that we’ve had a brief overview of the benefits software can provide, let’s get into the associated costs. This will be software-dependent but for the most part, you will have to financially account for:

  1. Software acquisition costs
  2. Software implementation costs
  3. Software training costs
  4. Software maintenance costs
  5. Hardware costs
  6. Software Renewals

Let’s look at these in a little more detail:

1. Software Acquisition Costs

When we talk about acquiring software, many are annual subscriptions. Many software companies use this model to price their services and chances are that the software you’re looking for will require you to pay them a certain amount on an annual basis.

2. Software Implementation Costs

Advanced software is complex and difficult to set up so hiring a consulting firm to implement it on your company’s computers and devices is very important. Smooth implementation at the start will save you from a myriad of problems and headaches in the future.

3. Software Training Costs

When the software is set up, your staff will have to undergo training to get the most out of it. This is usually provided by the software makers themselves, but third-party trainers and weekend training camps are always an option you can rely on.

4. Software Maintenance Costs

Unlike other services or products, computer software is incredibly technical and needs constant updates and maintenance to run smoothly. There are bound to be, so companies need to ensure that they have the contacts to troubleshoot issues quickly.

5. Computer Hardware Costs

Some software might require special computers or peripherals to run efficiently. This can be a very steep cost as cutting-edge technology is not cheap, and depending on how current your devices are, your entire ecosystem might need to be replaced. For enterprise software, additional servers may be required.

6. Enterprise Software Renewals

You can also finance Enterprise Software Renewals , including implementation, training and hardware costs. You can turn the entire software renewal cost, including implementation, training and hardware, into fixed monthly payments. 

The Private Financing Solution for Software, Implementation, Training and Hardware

Private financing offers a solution to all this. Third-party vendors like Dimension Funding will help you finance your entire software subscription (or purchase if it’s a bespoke option) with easily manageable fixed monthly installments.

But what makes this a great option for businesses is the fact that you can easily finance all associated costs even after the beginning of your software subscription. Flexible financing allows you to continually add software-related costs to your principal as and when you need it up to the term of the subscription.

This is very helpful for several reasons chief amongst which is the peace of mind you have knowing that there won’t be any unpleasant surprises or costs waiting for you down the line. This helps you manage your finances better and can improve your business’s overall cash flow.

Some other advantages of privately financing software through Dimension Funding include but are not limited to:

  • Up to $500k in software financing with no financial documents required. (Over $500k does require financial documents.)
  • Hardware like computers, peripherals, servers, etc. can be included in your financing.
  • Annual subscriptions get turned into easy-to-pay and manageable fixed monthly installments.
  • Helps free up working capital for you to invest elsewhere.
  • Eligible on a wide range of software ranging from Microsoft to professional EHR, ERP, and CRM systems, HR and Accounting software, medical and EHR / EMR software and almost any type of subscription software.
  • Easy online application process with a quick turnaround time.

If you’re a third-party vendor selling software to customers, then all these benefits still apply. You’ll be able to offer them all these guarantees worry-free, and all the associated costs your clients face will be easily managed.

Making smart investments and getting positive ROIs on them is key for long-term business growth in all industries. Investing in high-quality software has the potential for incredible results, and with smart financing, you won’t have to spend an arm and a leg to get them either.

If you’re interested in learning more about financing your company’s software through a third-party vendor or if you’re a vendor wanting to offer financing to your clients for all the reasons we’ve outlined and more, be sure to contact Dimension Funding to get a head start on your approval process.

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Current State of Equipment & Software Industry After COVID 19

Software & Equipment Financing
Software & Equipment Financing

Current State of Equipment & Software Industry After COVID 19

To say that COVID-19 adversely affected the worldwide economy would be a gross understatement. The worldwide pandemic that started in the beginning of 2020 is still going strong and while the situation in many parts of the world is consistently getting better, we’re not out of the woods just yet.

Thankfully though, the US economy is recovering and as vaccination becomes more common, there seems to be hope for the future. In this article, we’ll analyze the effects of COVID 19 on equipment and software companies, the current state of the economy, and industry as a whole, and we’ll try to predict what the future holds. For 2021 and beyond.

Side Effects to Business Operations

Operating a business during a virus outbreak is a big problem for a number of reasons. For one thing, close contact between your employees has to be minimized while also ensuring that the work you’re doing continues at a respectable pace. Another obvious setback is the overall demand and supply of your product or service.

Uncertainty and fear kill demand faster than anything and unless your work fell into the essential category of things that would be used every day regardless, your business numbers undoubtedly suffered. This is especially true for the equipment and software purchasing industry.

The main customers of these services and products are usually construction companies, and medium-sized to large corporations looking to make upgrades. Almost all construction efforts ceased after the outbreak and many planned business upgrades were put on hold due to the extraordinary circumstances. In 2020, almost 67% of US construction firms reported cancellations or delays in planned projects.

The construction industry had to suffer from many layoffs as well and contributed a total of 10.1% to the overall unemployment rate in the country. Another issue for equipment purchasers and suppliers was the fact that many of their assets were shipped from China and Korea. Due to the travel and shipping restrictions, delays and canceled deliveries were a normal occurrence.

All these factors meant that the equipment purchasers in the market lost some of their biggest customers practically overnight; a hit the industry is still recovering from.

The Current State of Economic Activity

Now that 2020 is behind us and we are well into 2021, many people are looking towards the future with hope and a newly invigorated sense of cautious optimism. Several variants of a COVID 19 vaccine have passed clinical trials and are now being distributed all over the world. In the US, vaccinations are being carried out consistently with close to 63% of adults having received at least one shot. While the US hasn’t reached “herd immunity”, the situation has improved with the lowest new Covid cases in over a year.

From an economic standpoint, things are also beginning to improve. First quarter 2021 had an increase in real GDP of 6.4 percent. Many construction projects that had been sidelined are now starting up again and companies are starting to rehire and upgrade their capital to accommodate these new changes.

Obviously, as the construction industry starts picking up steam, so do their suppliers and equipment purchasers. Companies operating in this sector should expect their order volumes to increase steadily as the year progresses. Shipping should also be much easier now as many of the trade restrictions caused by the virus have been relaxed especially for heavy imports.

All this is good news for the economy and industry as a whole and although the situation of our worldwide health is far from resolved, it’s a step in the right direction and should usher in a wave of much-needed progress for many countries.

Predictions for the Future

Predicting the future is very difficult in the best of circumstances, which makes it almost impossible to do amidst a global pandemic. While the vaccinations are rapidly underway, it will be many years before every person in the world is safely vaccinated and protected. Another thing to note is the variability of success stories in our current times.

A serious problem down the line might be the different permutations of the virus originating in different parts of the world such as the one in the UK. This strain is said to be much more contagious and harmful than the current one we’re fighting which is alarming, to say the least. However, according to a World Health Organization official, the Covid-19 vaccines authorized for use in the US and Europe offer protection against the main variants known to exist.

All these factors make predicting the future difficult. The rapid nature of change might clear things up quicker than we anticipate, or it might worsen them considerably. As cautious optimists, we think humanity will keep fighting this battle and we and our economies will adapt to accommodate the changes necessary to do so. It might be wishful thinking but if things keep progressing the way they are now, then our industries might recover sooner than we think.

We hope this article helped give some clarity to the current situation of the worldwide pandemic and what it means for the equipment and software purchasing industry.

If you’re interested in getting financing for your customers through a third-party vendor, be sure to contact Dimension Funding. You’re only an online application and a quick approval process away from getting a time-tested, hassle-free, and convenient financing option.

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A Small Business Owner’s Guide to Obtaining Equipment Financing in 2021

Equipment Financing
Equipment Financing

A Small Business Owner’s Guide to Obtaining Equipment Financing in 2021

It’s no secret that upgrading the tools you use on a daily basis is key to long-term success and growth as a business operating in the twenty-first century. The benefits are undeniable and strategically upgrading your equipment can help lower your costs, produce higher quality products, and can help you develop a loyal customer base.

This is easier said than done though and among the problems of upgrading existing equipment, the biggest one seems to be the associated cost. Because of the high demand and incredible engineering required, most machines are very expensive and require a significant amount of capital to either purchase or maintain regularly.

But thankfully, just like our machines, our financing options have also progressed to make the process much simpler and accessible to almost everyone. In this article, we’ll walk you through the benefits of upgrading your equipment (if you’re on the fence), the options available to you, and why private financing is probably your best bet.

Benefits of Upgrading Your Equipment

Before jumping into financing your next upgrade, it’s important for you to rationalize the potential gains of said upgrade. If the improvement in your tools is not going to carry over to a marked increase in your profitability, then it’s an unnecessary expense you should probably avoid.

There are, however, some fantastic benefits to be had through upgrading your equipment and we’ll dive a little deeper into them down below:

  • Productivity. Perhaps the biggest reason you should consider an equipment upgrade is because of the increase in production capacity you will likely see. Machines can work longer and faster than humans. They don’t need breaks, and as long as you’re keeping them well maintained, don’t need to be motivated to work harder. As a result, you can increase the volume of your operation which will, in turn, help you reach economies of scale much quicker.
  • Fewer Accidents. Another huge benefit of utilizing machines in your workflow is the decrease in hazard probability. Newer machines are equipped with advanced features that help them perform their functions while keeping safety standards in check. A good example of this are lasers that stop the machine instantly if something passes through them.
  • Better Consistency. Besides producing more volume, better equipment can help you greatly streamline your quality control. Machines very rarely make mistakes and can recreate something thousands of times over without missing a beat. They’re also good for catching mistakes in production that might escape the human eye or understanding.

Your Options (Banks vs Private Financing)

Now that you’ve understood the benefits of potentially upgrading your equipment, let’s get into the two most popular financing options available to you: bank loans and private financing through a third-party vendor.

Bank loans are an incredibly popular financing option and chances are you’ve probably thought about going down this route at least once. Banks can be helpful in obtaining capital when the amount you require is monetarily very heavy. Banks are also a good option if you have a good relationship with them and have been in business for many years. This can help you get more favorable terms of lending that might not be possible otherwise.

The biggest hurdle for this option is dealing with the bank itself funnily enough. Banks are unwilling to invest in very small businesses with little to no credit history so if your operation is just getting off the ground, the chances of getting approved for a loan are next to zero. Besides having a good credit history and reputation, banks also require your assets as security, in case you’re unable to pay them back down the line. This can cause problems in the future for your business, as many examples have proven in the past.

Another thing that should be mentioned is fluctuating interest rates. The amount you have to pay the bank every month will vary according to the interest rate at that particular point in time. This creates uncertainty and can cause problems in your planning as the exact amount you have to pay may change significantly on a monthly basis.

The other option at your disposal is private financing. This increasingly popular option has many benefits for small businesses in particular. In a nutshell, private financing companies like Dimension Funding purchase the equipment you need for you and you pay them back over a fixed term.

Let’s look into some of the benefits private financing provides compared to bank loans in a little more detail in the next section.

Why Private Financing Could Be the Best Option

  • Fixed Monthly Payments. As we’ve already mentioned previously, banks operate according to interest rates and as a result, the amount you have to pay every month can vary quite significantly. Private financing on the other hand has fixed payments that you decide during your term settlement. This amount never changes and never fluctuates. This creates consistency and helps you plan your quarterly finances more efficiently as you know exactly what you have to pay.
  • Lock in Low Rates. Rates are currently very low right now. However with the potential for inflation, rates are likely to rise soon. Through private financing you can lock in low rates now and pay with tomorrow’s dollars.
  • Finance Up to $250k with No Financing Statements. “Application only” options allow you to get financing for equipment valued at up to $250k incredibly quickly as no documentation is required from you. Just an application. If you require equipment that is more expensive than $250k then you just have to provide your financial statements which will be processed much faster than bank loan procedures. Some of these procedures can take anywhere from a couple of weeks to a couple of months; time that you could have spent working and optimizing your business.
  • Finance 100% of the Costs. One thing that banks don’t disclose openly is the fact that they’re only paying for the equipment itself. There are many hidden charges like delivery, setup costs, maintenance, training, and you are expected to fulfill all of those yourself. Private financing companies, on the other hand, allow you to finance everything we’ve mentioned and more in your principal amount. This means that you get an all-inclusive option that covers everything you need to get up and running.
  • Fast Online Application Process. Instead of the tedious documentation and prolonged waiting periods that banks subjugate their customers to, private financing allows you to get what you need quicker and easier through a robust online application process. Just fill out the form and you can get approved in as little as a couple of hours.

Another thing that bears mentioning is that private financing companies like Dimension Funding can help you acquire almost any form of equipment you can think of. Commercial, construction, IT, software, material handling, and medical.

If you’re interested in financing your equipment through a third-party vendor, be sure to contact Dimension Funding. You’re only an online application and a quick approval process away from getting a time-tested, hassle-free, and convenient financing option for your next equipment upgrade.

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How Private Financing Is Revolutionizing Equipment & Software Purchasing

Equipment & Software Financing
Equipment & Software Financing

How Private Financing Is Revolutionizing Equipment & Software Purchasing

As we enter the second decade of the twenty-first century, our technology and machinery have progressed with an unprecedented degree of innovation. The capabilities and possibilities enabled by these innovations are quite literally endless. Almost all major businesses in the world utilize technology in one way or another and the demand for specialized equipment like robots and software is at an all-time high.

While the presence of this demand and interest is a good thing, the cost of admission continues to be a problem for both equipment purchasing partners and companies alike. There are workarounds to the problem, mainly bank loans and leasing, that lessen the burden but it’s not necessarily the best solution. But thankfully, there is another option that many purchasers are taking advantage of that you might not have considered.

In this article, we’ll tell you why privately financing your next equipment or software purchase through a third-party vendor could be the best overall choice for you and your business.

The Costs of Equipment Purchasing

You’ve probably understood already that equipment and software aren’t cheap. Especially the more specialized examples. This varies according to the equipment type and function of course but for the most part, it’s a serious financial decision to make. And also, a potentially beneficial one. The benefits of upgrading your equipment or using new production processes are huge and would require an entirely separate article to go in-depth into. The short version of all the benefits you gain access to include:

  • More productive capacity
  • Better pricing structures
  • Improved worker safety
  • More consistent work output
  • Higher quality work output
  • Potential to reach more customers
  • Ability to expand operations in more than one location

 

Bank Financing of Equipment & Software

Now let’s move onto financing your purchase through a bank. We’ll assume that you’re buying instead of renting the equipment or software in question. Renting isn’t a bad option by any means but as the instances of its usefulness are niche in nature, we’ll stick to the more orthodox approach of buying equipment outright.

Bank loans are the conventionally popular choice and there are certainly advantages to this approach. For one thing, banks can loan a very large amount of money if required. For another, if you already have a good relationship with your bank and have been in business for a considerable amount of time, then acquiring the loan will be much easier.

Bank loans have problems that many people don’t think about before making this important decision, however. Here are some of them in a little more detail:

  • Getting the Loan Itself. As we’ve already mentioned, getting a loan as an established business is easy but getting one as a new startup is almost impossible. Banks will very rarely trust newcomers with a huge amount of capital without a proven track record and it’s a classic catch 22. This is a big reason why bank loans are an inefficient choice for small business owners.
  • Assets Taken As Security. Another procedure in the loan approval process is agreeing to let the bank use assets of yours as security. The bank does this to ensure it doesn’t suffer a loss in case you don’t end up paying it back. Whatever the reason, it lessens your standing and negatively affects your company’s equity.
  • Only Equipment Is Financed. One thing buyers tend to forget is that there are many hidden costs associated with buying a piece of equipment or software. Delivery, setup, maintenance, training, troubleshooting, etc. All these processes come at a price and the bank will not assist you in handling them.
  • Uncertain Monthly Payments. Banks operate based on interest rates which fluctuate and change with the economic health of the country. Because of this, monthly payments are very rarely steady and can vary on a month-to-month basis. This makes financial planning a challenge and can hinder your yearly budgeting and profit forecasting.
  • Long Application Process. This might seem like a nitpick, but it’s an inconvenience, to say the least. Banks have very long application procedures and the waiting periods between appointments and approvals can either be a couple of weeks or a couple of months. Besides being a waste of your valuable time, it’s not a good option for people looking for a quick solution to a problem. So, unless you’re prepared to wait a while for your equipment purchase, bank loans might not be your best bet.

The Private Vendor Financing Solution

On the opposite end of the spectrum, private financing offers a much easier and more efficient purchasing opportunity for both small and large businesses alike. Companies like Dimension Funding are leading the charge in providing an easy, safe, and economically viable option for vendors and private customers alike.

The main advantages of private financing include:

  • Fixed Monthly Payments. Unlike banks that put you at the mercy of fluctuating interest rates, private financing lets you choose a low monthly payment for up to 60 months. This helps you plan out your finances better and keeps surprises at bay. You know exactly how much you’re paying each and every month. This amount is agreed upon during the sign-up process.
  • Up to $250k Without Financial Documents. You can finance equipment worth up to $250k through an “application only” option. This is in stark contrast to banks that have lengthy application processes as well as hefty documentation requirements. If the equipment you’re looking to finance is more than $250k then you just have to provide your financial statements.
  • Finance 100% of the Costs. As we’ve already mentioned, banks only finance the equipment itself. On the other hand, private financing companies like Dimension Funding finance everything for you. This includes all associated costs like maintenance, delivery, setup, etc. You don’t have to worry about unexpected expenses arising as everything is taken care of and included in your principal.

Because of these reasons, private financing has helped thousands of businesses and individuals finance their equipment and software upgrades quickly and easily. We hope this article helped explain the reasons behind this rise in popularity and gave you ideas for your own business and workflow.

If you’re interested in financing your equipment or software purchase through a third-party vendor, be sure to contact Dimension Funding. You’re only an online application and a quick approval process away from getting a time-tested, hassle-free, and convenient financing option for your next equipment upgrade.

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How to Boost your Customer Retention by Offering Financing

Boost Sales by Offering Financing
Boost Sales by Offering Financing

How to Boost your Customer Retention by Offering Financing

Vendors that offer financing allow their customer to make a purchase without paying the entire amount upfront. In the case of software purchases, this means turning expensive ERP or CRM software purchases into more manageable fixed monthly payments.

Vendors that provide financing are particularly attractive to businesses with limited operational budgets. Since they don’t have to make large lump-sum payments all at once, they are able to maintain more liquidity.

Foundational Basics of Having a Financing Partner

Vendors can partner with a finance company to provide financing to their customers. This allows the customer to pay for the software subscription over the life of the subscription up to 5 years. It’s a powerful financing option during times of economic slowdown when getting a bank loan can be extremely difficult for small and mid-sized businesses.

Instead of heading to the bank, a customer can borrow the required funds from the vendor’s financing partner – subject to certain commercial terms and conditions. The customer agrees to repay this loan for a fixed period of time, and at a fixed interest rate (as low as 0% in some instances with a vendor discount required), which is in stark contrast to traditional bank loans.  This helps businesses finance investments that wouldn’t otherwise be possible, while maximizing sales for vendors.

The Nuts and Bolts of Vendor Financing

For businesses, vendor financing gives them access to funds quicker, and at more favorable terms, than traditional bank loans. This also helps vendors sell more, even during economic downturns. It’s particularly beneficial for vendors selling intangible assets like IT, which most banks are hesitant to approve loans for.

What surprises many business owners is that vendor financing is similar to borrowing a loan from a bank. It simply lacks the normal complexities involved in doing so. In some cases, it’s filling out a one-page financing application. This simplifies the borrowing process for small or mid-sized companies that may not qualify for a bank loan or might be avoiding it due to high interest rates.

Key Takeaways

  • Vendor financing involves vendors advancing capital to their customers, solely for the purpose of purchasing hardware or software from them
  • Vendor financing helps to facilitate long-term relationships between vendors and their customers

Also, customers can invest in multi-year subscriptions, which often comes with a cost benefit. The ability to do all of this with 0% funding can be a game-changer for both the customer and the vendor. (Zero percent financing requires a vendor discount to the financing company.)

In this type of arrangement, vendors solidify long-term relationships with their clients, which minimizes customer churn rate, a serious concern in the software industry. On the other hand, it helps small and mid-sized businesses to manage their limited resources more efficiently.

The Top 3 Benefits of Vendor Financing for Businesses

  • Access to capital that they might not qualify for otherwise
  • Turnaround times from application to funding are much quicker than with traditional bank loans
  • Turn a large upfront software subscription payment into monthly payments; longer repayment terms make borrowing more affordable

The Top 3 Benefits of a Financing Partner for Vendors

  • Better profitability due to shorter sales cycles, increased transaction sizes, and up to a 0% financing option (vendor discount required), which eliminates the need for customers to “shop around” for a lower interest rate
  • Improves customer relationships
  • An advantage over competitors who lack the ability to offer funding to their customers

Conclusion

Vendors that provide financing can accelerate sales and lower customer churn rate, allowing vendors to minimize the need for frequent customer acquisition. Also, it gives the vendor a competitive edge over others who do not offer such financing options that customers truly need during these times of financial adversities.

At Dimension Funding, we help businesses with up to $500,000 financing for software subscriptions, without all the hassle. Any financing above $500,000 would require minimal paperwork, which is executed electronically.

If you’re interested in exploring vendor financing options for your customers, contact us today to learn more!

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3 Strategic Ways to Acquire Material Handling Equipment on a Budget

Materials Handling Equipment Financing
Materials Handling Equipment Financing

3 Strategic Ways to Acquire Material Handling Equipment on a Budget

As the rate of economic expansion has increased so has the demand for specialized construction equipment. Much of 2020 bought a fast upward trajectory to a standstill but the tide is turning quickly. With vaccines being formulated to combat COVID 19, economic upturn is just around the corner.

Construction equipment contractors or vendors will be operating at full capacity very soon because of this. The acquisition of material handling equipment will certainly be a top priority especially if your fleet is underdeveloped. But the staggeringly high upfront costs make this a tough decision.

Thankfully, there are many ways you can stretch your budget when it comes to acquiring new equipment.

And in this article, we’ll show you how to do just that. We’ll run through the types of material handling equipment you might require, we’ll go over the options at your disposal, and will tell you why private financing could be your best bet.

The Types of Material Handling Equipment at Your Disposal

Material handling basically refers to the loading, unloading, and movement of goods within a factory or warehouse with the aid of mechanical devices. There are many iterations of machines that carry out such processes. Their classifications and examples include:

Storage and Handling Equipment

  • Shelves
  • Racks
  • Bins
  • Drawers
  • Stacking frames
  • Cantilever racks
  • Mezzanines

Bulk Material Handling Equipment

  • Stackers and reclaimers
  • Hoppers
  • Grain elevators
  • Bucket elevators
  • Conveyor belts
  • Dump trucks
  • Screw conveyors
  • Rotary car dumper

Industrial Trucks

  • Hand trucks
  • Side loaders
  • Pallet trucks
  • Walkie stackers
  • Order pickers
  • Platform trucks
  • Forklifts

Engineered Systems

  • AGVs
  • Conveyor belts
  • Robot delivery systems
  • Automated Storage and Retrieval System (AS/RS)

Your options to acquire Materials Handling Equipment (Rent vs Buy or Lease)

Once you’ve decided on the equipment you want to invest in, your next choice is determining whether you want to rent or buy said equipment. This choice will be heavily influenced by your individual circumstances and the lifecycle of your operations.

When You Should Rent Materials Handling Equipment

Renting is a great short-term option. It allows you to get the tools you need quicker and cheaper when compared to buying outright. The amount of time you can actually use the equipment varies on your project and the agreement itself. These are usually quite flexible so finding agreeable terms shouldn’t really be a problem.

This is especially good if you just need a machine for a certain project. If your project requires a small machine you can rent just that for the required time instead of investing significant money. Niche use cases like these benefit the most from renting opportunities.

Another good thing about renting is the fact that you don’t have to deal with the maintenance of the machine. This not only saves time but also lets you save on service costs which can add up over time.

When You Should Buy or Lease Materials Handling Equipment

If you intend on using the material handling equipment for a long time, then buying is for sure the way to go. It ends up being more cost-effective in the long run when you factor in the frequency of usage and the costs of renting. If you have the funds, then investing in certain workhorse equipment pieces that have a wide range of functions is definitely wise.

Besides the cost savings compared to renting, buying is also the more convenient option. You can use the equipment bought whenever you require it and you don’t have to rely on the handler’s schedule or priorities. You can also save time by avoiding having to rent every time you take on a new project as the process can be tedious.

You also have the advantage of getting the exact equipment you need, and you gain the ability to customize it to your liking. You can even change the color to be more suited to your company; something you can’t do with rented machines. And with so many options to buy used or refurbished equipment, buying outright might not even be that costly to begin with.

Leasing equipment can be another way of purchasing equipment. A finance agreement and lease agreement look very similar and both result in you owning the equipment. In the case of a lease agreement, at the end of the term you buy out the lease, usually for a nominal sum such as $1. There are tax advantages to leasing or buying because you can write off the payments on your taxes. (See your tax advisor for more information or guidance on tax matters.)

Why Private Financing Is the Way to Go

Getting a bank loan is an option but we believe privately financing your materials handling equipment through companies like Dimension Funding is your best choice. Here are some reasons why:

  • Fixed monthly payments. Unlike banks that put you at the mercy of fluctuating interest rates, private financing lets you choose a low monthly payment for up to 60 months. This keeps unpleasant surprises at a minimum and allows you to plan your finances better and more efficiently as you know exactly what you’re getting into.
  • Up to $250k without financial documents. You can finance equipment worth over $250k through an “application only” option. You can get exactly what you’re looking for super quick because of this and if the equipment you need is higher than $250k you just have to provide your financial statements.
  • Finance 100% of the costs. Banks only finance the equipment itself. When it comes to the maintenance costs, delivery, and setup, you’re on your own. Private financing, on the other hand, includes all these costs into your application. You get an all-inclusive option that covers everything including the equipment.
  • Unsecured. Banks usually require all of your company’s assets as collateral for a loan. Private financing companies only use the asset being financed as the collateral.

Budget constraints shouldn’t be a limiting factor in your expansion. Knowing your options and making smart decisions on how and when to finance your upgrades is all it really takes. Keep your business goals at the forefront of all your decision making and you’ll be on the right track!

If you’re interested in financing your material handling equipment through a third-party vendor, be sure to contact Dimension Funding. You’re only an online application and a quick approval process away from getting a time tested, hassle-free, and convenient financing option for your next equipment upgrade.

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Vendor Financing Programs: Why There’s No Better Time Than Now

Vendor Partner Program is your Road to Success
Vendor Partner Program is your Road to Success

Vendor Financing Programs: Why There’s No Better Time Than Now

Vendor financing is an important marketing and sales tool available to equipment manufacturers, dealers, and distributors. Even when the economy was doing well, a significant number of equipment buyers were opting for purchases financed by the equipment vendor.

Now that the economy has been in an economic slowdown and cash liquidity is a major area of concern for most companies, equipment & software financing is in greater demand. This is especially true for small and medium-sized organizations that need the equipment or software now, but don’t have enough in cash reserves to fund the entire purchase upfront.

From a vendor’s perspective, the ability to finance a purchase is an important one, especially if their competitors can and they can’t.

Why?

Because businesses that are unable to make a purchase outright would have no choice but to go elsewhere to a vendor who can work with their current financial situation.

The issue is that for many small or medium-sized vendors, they simply don’t have the financial resources to compete with large manufacturers/vendors with captive financing capabilities and successful vendor financing programs of their own.

Vendor Financing Programs Are a Win-Win

For equipment buyers, a vendor financing program gives them the flexibility to make installment payments (typically on a monthly basis), so they don’t deplete their working capital. Often times, there’s also the option of leasing, if need be, against an outright purchase of the equipment.

For the vendor, equipment financing enables a long-term relationship building exercise with the customer, leading to an increase in customer loyalty, repeat purchases, cross-selling, and technology enhancements as and when required. This translates into more business and additional revenue.

Selecting the Right Vendor Finance Partner

While the need for vendor financing can’t be underestimated, the real challenge for many vendors lies in their ability to set up an equipment or software financing program on their own. Most small and medium-sized vendors simply don’t have the requisite finance – or infrastructure – to manage and run a financing program on their own. They also lack the knowledge and experience. As such, finding a suitable finance partner is paramount to success.

A good finance partner will have access to capital, as well as the requisite expertise to successfully manage an equipment and software financing program. In addition, the selected partner should have a proven track record of vendor financing in the specific industry in which the vendor is operating, as industry-specific knowledge and experience is critical to the successful implementation of such vendor financing programs. The financing partner should also have a large capital base to be able to provide long-term solutions and stability to relationships both with the vendors and their end customers.

Once a vendor has selected a financing partner, the end-goal should be to build a long-term and sustainable relationship with a single financing partner instead of exploring multiple different options.

Get Assistance with Setting Up a Vendor Finance Program

To have a more detailed discussion on this subject and understand all the benefits of setting up a vendor financing program for your customers, contact us today at 800-755-0585.

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