Every industry and profession has its list of go-to buzzwords. Why should financing be any different? We’ve compiled our own list of financing buzzwords often heard during a discussion around financing.
Financing Buzzword #1: No Budget, No Funding
We have all heard this from a client at some point when discussing pricing. How about responding with, “What monthly payment can you afford?”. It’s critical in analytical instrumentation sales to not let the words “no budget” or “we’re waiting for funding” end a sales discussion. Your clients came to you because they have a need. Financing is one of those creative levers that allows a life science company get the instrumentation they need in a payment plan that works for their cash flow.
Buzzword #2: Discounting Vortex
When the act of discounting quickly starts to erode your profit margin (and the perceived value of your product), we describe this as the discounting vortex. A sales rep extends a discount, only to be met by the client asking for a deeper discount. I suggest having a discounting threshold. Once this threshold is reached, explain to the Client that you have reached your discounting limits but if pricing is still a concern, it is a great time to discuss financing options.
Financing Buzzword #3: The Competitor has Cheaper System
If a Client is primarily price driven, this can be seen as a brick wall when it comes to having “the more expensive option”. Alternatively, try to position the quality and reliability of your solution, which leads to a higher cost instrument. And if pricing is truly a concern, financing options are a great way to the more reliable instrument.
Financing Buzzword #4: We’re a Start-Up Lab
Start-Up companies want to keep as much cash as possible. Additionally, many start-ups do not have access to traditional financing methods such as bank loans and lines of credit. With start-ups, deals can actually be won from your competitors by simply offering financing. At Bold View Capital, we love working with seed and series-funded start-up companies, and have enabled hundreds of them to acquire new instrumentation.
Financing Buzzword #5: Special Terms & Conditions
Sometimes companies, typically larger ones, will ask for extended terms, such as Net 90. Since most vendors offer Net 30, often purchase orders can be lost by this discrepancy. With financing, your firm can still get paid Net 30 while the client enjoys Net 90 terms. How? By having a vendor financing partner that can fill the gap. In our experience, many publicly-traded instrumentation companies have Net 30 payment terms that are pretty rigid. A financing company can be a great partner to off-set this by extending more generation payment terms to the client.
Financing Buzzword #6: Purchasing Next Year
Often, especially in the fourth quarter, we hear that the order has been pushed to the new year, even when the client needs the instrumentation today. Often when a client says they are purchasing next year, it can be a signal that the list price of your instrument has caused some ‘sticker shock’. Try responding with, “Would you be interested in placing a purchase order today if you didn’t have to pay for the instrumentation until Q1 of next year?”. There are a lot of creative ways a financing or leasing plan can be arranged that enable the client to acquire and start using a new instrument without owning it outright. Check out our list of 5 tips for how to suggest financing to your clients.
A big part of a salesperson’s job is listening to the client and understanding how you can offer value through your products and services. Don’t let the buzzwords stop you from achieving your sales objectives.