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SUMMER 2014 EDITION

Forefront
 

A Meaningful Finance Program Means More Opportunities Won

By Richard Wagner Esq., National Accounts Manager, Dimension Funding, LLC

Why aren’t more deals being closed?

Is the competition’s solution better? Does the competition have a superior platform? Is their contact, calendar management, billing, and accounting management designed better? Does their solution really take the headache out of running the business of law better than yours?

Or was it simply easier to purchase?

It’s no secret the software industry is highly competitive, as there are innumerable companies vying for market share.

How can software companies distinguish themselves? Software providers that relieve the pain from running the business of law with an uncomplicated, all-in-one solution should consider applying the same concept inward to their own business model as it relates to the acquisition of their software and services.

When it comes to the step in the sales process when the question is posed, “How would you like to pay?” your sales force has already anticipated the customer’s objection that the price is too high.

You’ve sent your sales force to all the sales seminars. Depending on your organization, they should always be closing (ABC) or asking pain questions during the consultative sales process. Still, not all leads are being converted, and not all opportunities are being won.

You’ve spent time poring over the question: Why should customers do business with us?

Consider making it convenient for your own customers by having flexible client payment options. In other words, come up with a way to take the headache out of acquiring your software and services, and getting you paid. An uncomplicated, all-in-one solution should be your priority.

If your organization hasn’t planned beyond traditional sales and marketing, and there is a lack of focus on the process by which your organization can best facilitate the exchange of your product for money, then your vision is short-sighted.

Get with the Program

What does it mean to have a financing program?

Letting the customer determine the sales process is a recipe for disaster. A good lead needs nurturing. So why would you abandon the customer during this critical time? This is especially confounding for vendors who proclaim they have created the solution to eliminate the frustration from running the business of law. Customers need you the most when they are contemplating how to acquire your product.

Whether or not your organization has worked with a finance company before, the advice is the same: Immerse yourself in the planning and implementation stage of the program. This will ensure the economics of the program make sense for the three parties involved: the vendor, the customer, and the finance company.

There are many misconceptions about the role finance companies play in the sale of goods and services. It would be foolhardy to let misinformation or a bad experience prevent you from entering into these types of programs with a trusted financial partner. There is simply too much to be gained.

A finance company pays the vendor in full upon delivery and installation of the goods; or more importantly, has the flexibility to make partial or full advance payments to the vendor before delivery and installation (usually by ACH) for the goods. This provides the vendor with increased cash flow which is one of the primary benefits a vendor enjoys from partnering with a finance company. In addition, the finance company assumes the liability that comes with lending money and collecting payments from the customer.

Look for Longevity

Vendors looking to partner with finance companies should seek one or two who have been in business for a lengthy period. This will lead the vendor to finance companies that have a variety of sources around the country. Moreover, a company with longevity should be able to fund deals with its own warehouse line of credit or working capital. This ensures a wide-range of your customers will get financed, and therefore, more deals closed.

The United States economy has undergone several significant events over the last 25 to 30 years, including stock market crashes, financial crises, and recessions. A vendor should seek to partner with a finance company that has shown the stability to weather tough economic times.

Satisfy Customer's Expectations with Promotions

One point of view is that to be a leader in the competitive industry of software sales, a business must adopt and adhere to a pricing strategy. In PricewaterhouseCoopers (PwC) Technology Institute’s paper, The Future of Software Pricing Excellence: Transaction Pricing Management, the authors note that in the high profit margin business of software sales, a leader must not only (a) optimize price and (b) protect margins, but also (c) satisfy customers’ expectations for discounts and special offers.

High profit margin businesses can afford to subsidize the cost of funds in a software transaction and still optimize price and protect margins. By working with a finance company, a software company can distinguish itself from the competition and become a leader by providing a convenient way to acquire its solution by offering low or no-interest rate promotions.

To figure the subsidy payment, the vendor and finance company agree on the interest rate the finance company would normally charge customers if no interest rate subsidy existed. There are several ways this can be done. However it’s important to note, the rate can be adjusted throughout the program.
It’s important to seek out synergy between the teams working together at the finance company and the vendor. For example, it may be quite helpful to seek out a finance company with lawyers on board to interact with vendor clients who are also primarily law firm personnel and lawyers. People who speak the same jargon and share common experiences create a certain level of trust. As with any partnership, trust goes a long way.  


  Dimension Funding

For more than 35 years Dimension Funding has provided equipment and software finance solutions to professional services organizations, including law firms. Dimension Funding has worked hard to build its successful reputation on transparent business practices, extensive resources and a consultative sales process. For more information, visit dimensionfunding.com.

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