What did you look for when you chose a consumer financing partner for your dealer network? Competitive interest rates? Good customer support? Smooth process integration and marketing expertise? These days there are plenty of options for manufacturers and wholesalers looking to provide consumer financing to their networks, from the big banks to smaller specialty houses catering to niche markets. Financing has become big business in Canada, with consumer instalment loan and credit card use growing by 11 per cent in 2013, according to Equifax Canada. The average Canadian now carries almost $16,000 of non-mortgage debt.
Yet not all institutions offer the same programs so how can you tell if the point of sale (POS) consumer financing provider used by your network of dealers is right for them? And what should you expect from a financing partnership?
Identify Your Needs
An important first step in assessing whether your financing partnership is the right one is to identify your priorities. Will low interest rates help your dealers finalize their sales or will an easy-to-use application process help more of your dealers master financing? These are the sort of questions Moriyama Consulting Inc. CEO Derral Moriyama says are critical to ask. “It is important to identify what you need from a financing partner and to pick someone that can provide this,” says Mr. Moriyama, a finance and business development consultant for BMO Financial Group, Crelogix Acceptance Corporation and MNP LLP. “Ask yourself what your partnership provides you – is it a quick turnaround on loan applications, competitive interest rates for customers, or the expertise to customize solutions to meet all your needs – and is that what you require.”
Seek Complementing Partnerships
Partnerships with more than a single provider can be a great way to meet the diverse needs created within a national manufacturing or distributing network. “You may need to partner with different providers for the different product lines you run because various providers offer better programs for certain areas,” Mr. Moriyama says. “Your company could easily have several financing partnerships working alongside each other covering its different divisions.” For example, you may need a quick turnaround for your consumer durables division but competitive rates for your home improvement division. This may mean having a mix of consumer financing partnerships with banks and specialty financing providers to ensure your dealers have the right tools for every job. Choosing several financing programs to meet your varying needs can often prove to be a powerful driver for growth, giving your dealers a better chance of closing more sales.
Ensure Access to the Tools to Close Sales
At the end of the day the most important thing any financing partnership should be doing is boosting sales, says James Plewak, founder and chief executive of Ontario-based Strength Finance. For Mr. Plewak – who has spent a lifetime training sales teams on how to best do this, particularly via financing – it all comes back to an ability and willingness to work with your dealers. “Does your provider do that little bit more or work that little bit harder with your dealers to get more sales?” he asks. “Look for a company that will invest more time in working with your dealers, rather than treating them as numbers in a system, to get the best results.” Many retail financing companies provide great tools that can be used to increase sales, such as marketing expertise your dealers can leverage off or strong customer service and merchant support to bolster sales. “It is all about profitability,” Mr. Plewak explains. “When you talk to your average business owner they just want to make money.”
Make Sure Your Partner can Deliver on a Sales Program
It is also vital to assess whether your provider is actually meeting your needs. You may have identified your priorities and know what your company needs from the partnership – but are you actually getting it? “Your provider should be someone who can deliver on their promises,” says Lorenzo Ghio, who has spent more than 20 years in consumer and commercial financing at Laurentian Bank, GE Commercial Finance and Crelogix. “All financing institutions pitch along the same lines – that they can tailor a program to meet the needs of your particular business. The key is making sure yours is actually establishing and executing the tailored program promised.”
The Right Partnership Matters
Be honest in your assessment of your partnerships. Only through honest and ongoing dialogue with your dealers can you understand their needs, and whether they are being met. Also ensure you review your needs with your financial partner at least once a quarter. If all your dealers needs are not being met by a single provider – from marketing expertise to competitive rates – consider a complementary partnership with various lenders. After all, it might be the key to more sales.