Selling Finance - How to Answer those tricky questions
- Date: 23 July, 2019
I don’t understand finance, what if my customer starts asking questions?
Don't worry - your job is to sell software, our job is to sell finance. If a customer starts asking questions you are not comfortable answering, simply say that you will ask your finance partner to give them a call to run through the finer details. After all, if the customer is interested in a finance option, they shouldn’t be averse to speaking to us.
The customer has asked about the rate, what should I say?
The rate is very much dependant on the amount we are financing, the strength of the customer i.e. how well the customer has been trading and how we structure the finance. It is difficult to give an exact rate without conducting a review in the first instance. Rest assured our rates are competitive and we always strive to offer some of the best in the market.
The customer doesn’t want to offer any security?
No problem, all of our finance agreements are unsecured but we may ask for a Cross Company Guarantee or Directors Guarantee in some instances but we will always discuss this with the customer first.
Is finance a true OPEX?
Unfortunately not. It is only possible to fund software and the costs associated with a typical project on a rental or loan agreement and both are technically On Balance Sheet products. The customer may be able to treat the interest and depreciation costs as a business expense and therefore offset the costs against the P&L but it would be for the customer to discuss the treatment of either product with their company accountant or auditors.
How quickly can a facility be set up?
We can work as quickly as you need us too. Response times are usually dictated by the customer and how quickly they can get us the information we need. Essentially for deals below £100k, we can usually get the facility in place and the finance paperwork over to the customer within 24hrs. For deals above £100k, this will take longer and will very much depend on the customers trading history.
What happens if a customer wants to go ahead with a finance option?
Simply send Simon Cooke an email with the full details or give him a call to discuss the project. Simon will usually advise you to send a warm introductory email to the customer, copying in Simon and asking both the customer and Simon to liaise with each other. Simon will then send the customer an email and look to engage with the customer independently, providing you with regular updates during the process.
Ok, so the facility is in place, what next?
Once the facility has been approved and we have the signed finance paperwork back from the customer, Reality will send your accounts team our invoicing instructions. Depending on how the deal has been structured will depend on whether we payout 100% of the contract value on day one or 50%, with the remaining 50% due at the point of install. Releasing payments in this way is called a stage payment facility. This can be provided free of charge and will help the customer manage the release of payment to Access.
It is important to note, however, that the customer is the only person who can authorise the release of any payments, regardless of whether the payment is due.
What happens when the finance agreement is activated?
When the first payment is released, the finance agreement is activated, and the customer’s monthly payments will commence. It is not possible to change a finance agreement once activated.
Can the customer add anything to the finance agreement after it has been activated?
No, but if the customer wants to add anything to the existing agreement, we can provide the customer with a second finance agreement and reduce the term of the agreement so it runs in line with the first finance agreement.