Manufacturers, Lessors Play Pivotal Roles in Financing and Leasing Process

As manufacturers add to their own service and product offerings, those that have captive financing arms are providing leasing options to support them and better enable dealers to make sales. Canon Financial Services, for example, supports Canon and Océ product lines, which include production and office imaging technology. It also supports Canon’s managed print services, both with its direct division as well as those dealers that have developed this offering.

“Canon’s understanding of this market allows CFS to review the credit in a more holistic approach and allow for higher soft costs,” said Dominic Janney, vice president of sales and service for CFS. “With the release of both our imagePRESS C850/C750 and imagePRESS C10000VP /C8000 VP, our dealer base has been able to adapt to the ever-changing marketplace and provide products and solutions to penetrate the production print space.”

Dominic Janney, CFS.

CFS supports the new production print lines with a collaborative offering (direct and indirect channel partners) and a zero percent financing package designed to place new units in the field while displacing competitive units. “This has proven to be a strong offering that allows us to separate ourselves not only with the production excellence of the product, but also a financing option that only a captive unit can offer,” said Janney.

Researching the Product

Creating financial products to support new dealer activities has required lessors to do some homework. “We review each product that we finance, from essentiality to an end user, the aftermarket for it, and any kind of residual valuations,” said Fred Carollo, vice president of originations, Office Products at EverBank Commercial Finance. “We evaluate any new products such as signage or production print or managed services as a pure service offering. It’s our job to understand the industry.

“We do our own due diligence behind a product and make sure it’s something we’re willing to finance,” Carollo continued. “The reasons include the value of it in the open market during the term, essentiality to the end user, and what it’s being used for. We will also look at the manufacturer of the product and make sure we understand the product from that perspective also—to see what generation the product is, for example. If we do our job well from our side, it does reduce the risk.”

Lessors also like to see that dealers are properly prepared to offer new product and service lines.

Fred Carollo,
EverBank Commercial Finance

“My advice to any dealer is to make sure they understand what they are going into. Become an expert just like they did selling copiers back in the day,” said Carollo. “The other side of it is never to lose focus on who they are, which is their core product offering.”

Another area that lessors look at to evaluate dealers is their level of reliance on an offering. “If there was a high reliance on software or managed network services, we will look at the dealer to see that they know what they are doing in the area,” said Carollo. “If they have a good understanding of the market and approach it correctly, it takes a lot of the risk away from us as the lessor with the enforceability of the contract.”

Knowledge Sharing

Dealers benefit from lessors’ due diligence because what they learn is typically shared. That knowledge can be a resource for dealers when they are evaluating whether to take on a new brand. “That is a question we get asked a lot: ‘What do you think of this product line vs that product line?’ From the manufacturer level right down to the product itself, we get asked about our experience around the country of what we see in the market,” Carollo remarked.

Knowing the likely residual value of a model or product line at the end of its lease term is important to dealers, and lessors will have that information. “Just looking at copiers on large transactions, some manufacturers’ products are worth more five to six years from now than other manufacturers,” he added.

Bob Hunter, DLL

Having access to lessors’ research and data can be particularly useful when one or more manufacturers are going through a difficult transition, or for whatever reason a manufacturer no longer meets the needs of a dealer. “The manufacturing environment is rapidly changing,” said Bob Hunter, senior vice president of sales, Office Technology for Lessor at DLL. “Some people were concerned about Sharp, but now with the investment from Foxconn, Sharp is very liquid.”

A lessor could help dealers understand the risks and opportunities that come from change so that they can make better investments and choose partners more wisely. “DLL is always willing to sit down and help [the dealers],” said Hunter. “When there’s opportunity, we’ll help you capitalize on it. Where there’s a challenge, we’ll help you work your way through it.”