While this month’s State of the Industry report focuses on in-house leasing and financing, it has an underlying supply chain subtopic that, three years ago, probably would not have existed. Certainly, shipping/installation delays are hardly strangers to the office business, but when the actual receipt and completion time frame for a hardware purchase is an ongoing open question, it opens a slippery slope of considerations.
This week’s leasing and financing feature asks a somewhat sensitive question: Some dealers are closing and commencing transactions without all of the equipment installed. How are you, as a dealer, getting commitments from your customers to complete these transactions prior to the order being completely fulfilled/installed? The simple answer is through communication, although simple is not a concept so easily broached these days.
Jennifer Watts, manager of leasing operations for Gordon Flesch Company of Madison, Wisconsin, believes keeping open lines of communication is critical to ensuring a smooth transaction. Still, a one-size-fits-all approach doesn’t work.
“Given the supply chain issues the industry is facing, we have to be attentive and communicate more than ever with our customers,” she said. “I think most of our customers understand the issues we’re facing, so if we work directly with them to address the issue of equipment delays, we can overcome any challenges. The solution will vary depending on the customer, but it is driven by a personal conversation with each one.”
Written Agreements
In working with GreatAmerica Financial Services, Richmond-based Virginia Business Systems uses a substitution agreement that allows the dealer to employ like, alternative gear in lieu of the missing device for multiple unit transactions that allows the client to make the new payments while satisfying buyouts. According to President Jim Dotter, the dealer discloses this practice at the onset and customers must sign off on the arrangement.
“Regarding commitments, the sooner they sign our agreement, the sooner their equipment will be in and pricing secured,” he said. “With rising transportation costs, lease rates and equipment costs, locking in pricing is not a sales tactic…it’s reality.”
The variability of each transaction goes a long way toward dictating how the situation is handled by Nashville, Tennessee-based RJ Young. AJ Baggott, company COO, believes it all boils down to the dealer’s practice of over-communicating the supply chain status while providing flexible options that meet customer needs.
“All of their vendors, regardless of industry, are having some kind of supply chain issue,” he said. “Remaining transparent and communicative has allowed our team to respond to the customer rather than dictate to the customer.”
Matter of Trust
Steve Sumner, vice president, secretary for Datamax, headquartered in Little Rock, Arkansas, notes the dealership has been using substitute equipment for clients until the ordered gear is installed. The client primarily cares that the temporary machine satisfies their needs, and as for attaining a commitment, that groundwork has been in place during the life of the partnership between dealer and customer.
Upfront transparency on the part of the sales rep is important to keep the client abreast of estimated dates for receiving and installing. “The customer is convinced their business will not be interrupted, and they have trust in Datamax’s abilities and people to honor our commitment to them,” Sumner said. “There’s a lot of faith that goes into these decisions during this time period.”
For some dealers, including Centriworks of Knoxville, Tennessee, closing and commencing a transaction before installation is a hard no. CFO/CSO J. Mark DeNicola simply doesn’t advocate for the practice.
“We are not closing and commencing transactions without all of the equipment installed, and we do not believe this is a good option for the client or us,” he said.
