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December 2009 | Volume 12 / Number 12
The Channel Perspective

When Money is Tight, Provide Creative Solutions

With today’s economy as challenging as it is, a reseller needs to be as flexible as possible when dealing with customers. You have made significant investments to identify each new customer by going to shows, advertising and through public relations. Obviously, you want to maximize your opportunity and not lose a sale because the customer cannot afford your solution.

During your sales process, you know the customer wants the better IP phone with your PBX (News - Alert) solution. He may also order more IP phones with his initial order, but the price does not fit his budget right now. Sound familiar? I have heard this countless times.

Many sales people and organizations will try the old standby and offer the customer a discount. While this will work for the marginal opportunities, it will not work for those customers that have real budget issues. As a manager, you know that there is a certain price/margin you cannot go below or the sale does not make any money.

Discounts are not always the correct answer. The sales person may see a small discount, one that he knows could be larger, as an easy out for not making the sale.

You have just sold your solution to the customer. It has taken you three months and you are the solution he would like to install, but your solution does not fit his budget. You do not want to give the product away with more discounts.

If your company is not hurting for cash flow, look at payments over time. This may be a solution both companies can live with. Sit down with the customer and see what will work for them and come back with a proposal. You may be able to work the payments to span three to 12 equal payments. This will delay your company from receiving the profit margin, but if the deal was lost, there would be no profit.

If your company cannot finance the customer’s purchase, suggest leasing to the customer. Most business equipment qualify: machinery, computers, software, office equipment and office furniture are eligible. I have worked with a number of leasing companies and find most to be very responsive and innovative.

This can also prove to be another source of income for your company from the customer purchase. Normally, the leasing company will include several points in the quote for the partner that brought the business to them. With this solution, the customer payments can be spread over a longer period of time.

For example, a quote for a customer solution of $71,875 could be structured similar to the following on a lease basis:

Lease Term 60 Months 48 Months 36 Months 24 Months
Fair Market Value $1,656.29 $1,966.87 $2,477.99 $3,507.45
$1 out $1,656.29 $1,966.87 $2,477.99 $3,507.45

When leasing, there was a tax advantage in 2009. If extended into 2010, it would allow the full value of the purchased equipment put in service, up to $250,000, to be deducted in full by the purchasing company. Even if you decide to lease the equipment as a fair market value lease you can still claim the lease payments as a business expense and deduct 100 percent of the payments.

Check with the leasing companies and your accountant for full details on current laws.

Do not overlook barter as an option. If the company you are selling to can provide you product or services that you can use, this may be the first option that you want to discuss with your customer. Taxes will still potentially need to be paid, but this may help with making the sale. If your customer is an advertising firm, Web hosting firm, accounting or law firm, you may have found a perfect solution.

Barter does offer many side benefits such as: a competitive edge, improved cash flow by reducing cost and increasing sales, and new cash sales resulting from word of mouth advertising.

A tough economic time helps bring out the creative nature of American businesses. Put some of these creative financing solutions in your arsenal to help you win more battles against your competition. IT

Don Witt is president of cyLogistics (News - Alert) (www.cylogistics.com).

» Internet Telephony Magazine Table of Contents



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