If your customer leases, here are a few ways to distinguish you from the regular sales people.
Many sales organizations assume that as soon as equipment is delivered the job is complete. The service organization takes over. Sales must wait for the next equipment release to sell more to their customer.
As you separate yourself from the rest of the salespeople, you can provide that little extra help that sets you apart from your competition.
- Counter-Signed Copies: Be sure that the leasing company sends your customer, copies of the counter-signed and fully executed documents. Let your customer know that you facilitated this follow-up item. Few Lessors’ send out fully signed contract packages. I assure you, at some future date; your customer will try to find their contract copies and will think of you with gratitude.
- Track Lease Expiration: At lease commencement, make note of when your customers lease expires. When the lease commences, enter into your customer management record, the date that each customers lease ends. Schedule customer calls with follow up reminders months before the lease terminates…
- Ahead of the Pack: Besides having a jump on your competition, you help your customer avoid falling into a lease automatic extension. A lease extensions means that the equipment stays and the customers rent continues longer than the original lease term. They are paying extra payments on old equipment. Your plan to upgrade that customer is delayed by the lease automatic renewal.
- Leasing Company Profits: You’d think the leasing company would send the customer a letter to tell them the lease end is approaching. They do not. It would be good customer service for you to help your customer remember that their written, end of lease notice is due. Leasing companies don’t send end notices because automatic renewals are a big contributor to leasing company profits. Lease extensions or forced equipment purchases delay your next sale and cost your customer extra money.
- Timely Notice: If your customer does not give the leasing company written, timely, end of lease notice, the customer loses purchasing flexibility and control.
- End of Lease Options: Your customer must give the leasing company notice of their intent to do one of the following:
- Purchase the equipment.
- Renew the lease for a period from a period that may be as long as one extra year.
- Return the equipment to the leasing company.
Doing a little extra work today will place you at the front of the sales brigade for more business.
Mary Redmond is a top-rated female professional speaker, author, consultant and business coach. She is a negotiation and body language expert that instills confidence, inspiration and expert knowledge that sets up her audiences for success!
How often do you read a Software Agreement before accepting the terms and conditions? I bet few of us stop to read any Terms of Service before we download a new AP and agree to the terms and conditions, without ever wondering what they say. We are an impatient world and we want what we want, when we want it, which is NOW!
I’m talking about the software to operate any free or paid online service or piece of technology equipment. There are even software agreements and/or Terms of Service Agreement with common communication tools as Facebook, LinkedIn, a mobile device or for cloud software services.
With Facebook, I didn’t read the Statement of Rights and Responsibilities before I set up my Facebook account. Today, I found that I’d agreed to allow the following Contract Terms:
- “Permit a business or other entity to pay us (Facebook) to display your name and/or profile picture with your content or information, without any compensation to you.”
- “You understand that we may not always identify paid services and communications as such.”
Mary’s translation (MT): I agreed to become a spokesperson for a product or service that I mention on Facebook. In addition, the product’s manufacturer or distributor may pay Facebook for turning over my name, photo and comment. I’ve agreed to do this free. One more surprise is that Facebook does not have to identify their site content as a paid advertisement.
Six (6) Contract Examples
Recently I was prepared to download some “Free Software” for my Android phone. I decided to heed my own advice,
“Always Read before You Sign on the Dotted Line or Be Prepared to Pay the Consequences.”
The following are a few statements I accepted in a single Software Terms of Service contract. The portions of the agreement are underlined. My translation follows.
The Terms of Service (TOS)
- Sometimes, our products have additional rules. You have to follow these too.
MT: (Even if you don’t know what those rules are and we don’t tell you about them, you have to follow our rules.)
- Sometimes, we have to change our products. For example, new legal or technological developments might force us to alter certain product features. If we do and if it’s important, we’ll let you know.
MT: (Trust us. We will take care of you. Furthermore, we will decide what you need to know.)
- Please don’t break our stuff or compromise our security.
MT: (We will get mad at you, if you mess with our stuff or us.)
- We make our living creating cool products. Please don’t steal or copy them.
MT: (If you steal, we will make you pay.)
- If you do things, like break the law or our rules, or don’t pay us, or never use your account, we might terminate or suspend your account. However, if we do, we’ll try to let you know first.
MT: (We know where you live and we can bill you, however, for some unknown reason, we might not be able to reach you to tell you we are upset and cutting off your service.)
- Some parts of these Terms of Service, like the parts that limit our responsibility in legal cases, are so important that they will remain binding even if this agreement is terminated.
MT: (You only think this contract is complete, we may not be done with you. You might have to die to get out of the deal.)
I am not saying we must read every software agreement for our phone aps. What I am saying is IF the dollars involved that can be made or lost are big, read the agreement. Your business success and survival depend upon it.
Read all Software Agreement or Terms of Service contracts. If You Don’t Be Prepared to Pay a Price.
Thank goodness, we’re done with that lease negotiation stuff! The equipment is in and working great. “Stick those legal mumbo jumbo contract in a file drawer. Let’s get back to business and make some money.” That is often the command issued from the bridge by the Captain of the USS Hard Working Company.
There’s a sense of relief when an equipment purchase is complete. Business owners think nothing more needs to be done except make the lease payments. Believe that, and companies find ugly surprises. Leases require customer vigilance.
Five Lease Notification Requirements
1. Insurance Proof: If the Lessee does not send the Lessor an insurance binder proving that the leased equipment is covered by General Liability and Physical Damage insurance, the leasing company will secure the insurance for the Lessee, at a high price plus a fee.
2. Tax Exempt: Printing equipment lease payments are frequently sales and use tax exempt. State’s offer this exemption to encourage businesses to expand, add equipment and increase their employee headcount. Customers must send the leasing company proof that the equipment qualifies for the tax exemption or the leasing company collects and remits the taxes to the state. Some leasing companies add a processing fee.
3. Relocate Equipment: Request and receive written permission to move equipment across the room or to another town. Remember, the leasing company owns the equipment.
4. Corporate Ownership Changes: Notify the Lessor at least 30-days prior to any change in the company name, headquarters location or company ownership. If this is not done, the customer is in lease default. The default paragraph is the longest and most onerous paragraph in a lease. No company wants to pay the costs of a lease default.
5. End of Lease Notification: Notify the leasing company of your business plans for the equipment. Do not wait until the lease ends to give notice. This is one of the most costly requirements, If not heeded, the lease Automatically Renews.
WARNING: Lease end options usually include the ability to purchase, return or renew the equipment lease. A Florida printer I know is trapped paying twelve extra payments ($12,000) because they didn’t send the leasing company written notice of their intent to purchase the equipment for $1.00. The lease required them to send written notice no less than 90-days and no more than 120-days before the lease ended. Oops. Now that’s a budget blower.
SUMMARY: On the first day of a new lease, set up a lease management system to track all lease required notifications or be prepared to pay the price.
During December, a commercial printer (“Charles”) called for help. Charles told me about a digital press deal that was too good to refuse. The dealer told him that no one in all of the United States had a deal with pricing this low on such high quality commercial digital copier equipment.
In addition, the Regional Sales Vice President told Charles that due to the nature of this phenomenal offer, he was prohibited from sharing the specifics of the pricing with any of his competitors. He could only discuss the details with his business advisor.
When a deal sounds too good, it’s seldom that good. Trust you gut. There’s a catch. The fish on the line was a long-time client and friend.
The excitement of new equipment is tantalizing. The bait that lures owners is the “Year-End Special Pricing.” Every year these “never-to-been seen again deals” float in. When the sales representative tells you this pricing will never again be offered, Slow Down. There usually is another reason for dealers to offer another discount at the end of the next quarter.
This year, there was a new twist. Charles called to tell me about a $30,000 refund check the dealer promised to send within 2 months after a 60-month digital press lease commenced. The refund would be sent to Charles as long as he financed the equipment for 5-years at the original list price. Never agree to finance more than the selling price for equipment and do not mislead the finance company about the actual selling price of equipment.
No questions asked. If money is going to be sent to you for no reason at all, look out. There would be another $7,000 check sent for no specific reason that I could ascertain.
The sales hook was that Charles could take advantage of the maximum US Government’s tax deduction savings program called Section 179. This deduction was available in 2013 and was not available in 2014. The IRS website’s primary criterions for the 2013 tax deduction were:
- The asset must be new machinery or equipment.
- Equipment is for business use.
- Acquisition is through a purchase.
- The total new equipment acquired by a company for the 2013 Section 179 deduction was not to exceed $500,000.
The lease was structured to be for the equipment list price, not the discounted selling price. The discount was approximately $50,000. When an equipment sales representative is providing tax counsel and advice, get your accountant or tax attorney involved before making any decisions.
The dealer touted these sales benefits:
- Bigger write-off qualifying for a larger IRS Section 179 tax benefit.
- Extra Money to put back into the company bank account (The $30,000 refund).
- A little bonus help to make those larger monthly lease payments based upon the manufacturer’s higher list price. (The $7,000 check).
Always ask for an official written explanation and legal documents to explain a deal that seems “too good to be true.” Especially when there is the possibility that you are asked to misrepresent financial information to a finance company or the IRS. When Charles asked for the documentation to support the special promotional offer, the dealer rescinded the “special program.”
I am neither a tax attorney nor an accountant. I do not give tax or legal advice. It is clear that this deal was not the right thing to do. Fortunately, Charles has a moral compass pointed due north. He decided to do the right thing for his conscience and his company.
He acquired the equipment using regular pricing and the negotiated sales price on a good lease with a bank finance company. He sleeps well every night knowing he made the right ethical choice. What would you do?
A printing company owner I’ll refer to as Samuel, called me for help solve his problems with 2 digital presses. In his words “the stuff is always broken.”
This saga is still unfolding. Our lesson today, is what is about the definition of Equipment Uptime? I thought it meant how many hours a day equipment is running great. The Equipment Service Performance History Report touted a 95.5% uptime. WOW you think. What’s the problem?
Until I learned that this report measures the time between when a service call is placed and the arrival of the service technician. The digital press could have been out-of-service for hours or days. But Bill, the tech arrived on the scene in 45-minutes.
Samuel only cares about how quickly his equipment will be running, not jamming and producing high quality work. He is not excited that Bill set a land speed record to reach his plant.
Today Samuel and I had a conference call with the Regional Service Director (Greg), the Print Production Specialist and the sales rep for Samuel’s account. They all work for a large national distributor of printing equipment. Bill, the service tech couldn’t be on the call. He was busy fixing one of Samuel’s copier.
WHERE DO WE GO FROM HERE?
- Samuel will receive a weekly in-depth service reports on the service problems of the prior week and what corrective action was taken.
- The Regional Service Manager will meet with Samuel every week for the next month to review the service problems of the prior week.
- Samuel’s key equipment operator will maintain a log of every service call, the problem experienced and the resolution of the problem.
- Samuel and Greg will compare the Distributors service records with his own for discrepancies.
DOES THIS SITUATION SOUND FAMILIAR? If yes, stay tuned. I will keep following up on this. I am quite impressed with the commitment the equipment distributor has shown to date help their customer fix all the problems. Let’s see how this evolves.
A business owner asked if she could cancel her equipment lease. The leasing company told her that the lease was non-cancellable. She asked for help her understand the term “non-cancellable.”
Of course, you can pay a lease off early. IF and ONLY IF–you are willing to pay all of the amounts detailed below.
One hundred percent of all leases contain a price to terminate the lease early. Leases are meant to run their full length. Do not confuse a lease with a loan.
If a Lessee decides that they no longer need the equipment or that is has become obsolete, they may buy the lease out early—-for a price. Read the contract closely in order to know what you are for.
The usual Lessee early payoff quote often includes:
- All payments then due or past-due as of the date of the early termination.
- Any late fees that are then due.
- All remaining payments through the end of the lease term.
- Some leases require an early termination penalty fee or a restocking fee. of as much as 10% of the remaining payments.
- The current fair market value purchase price of the equipment assuming that the Lessee wants to own the equipment.
- Sales tax on the equipment fair market value purchase price.
- Property taxes due on the equipment.
- If the Lessee does not want to own the equipment, they owe the price to pack and ship the equipment back to a location designated by the leasing company, anywhere within the Continental United States.
- The Lessee must insure the equipment during the return shipping period.
- In addition, if there is a service contract associated with the lease, the Lessee owes a penalty on that as well.
In reviewing a digital copier lease and service contract, it was discovered that the penalty for early cancellation was costly. The early cancellation on a 36-month lease contained a 12-month penalty if the service contract was terminated within the first 12-months. If termination occurred in the first 24-months, the Lessee owed a 9-month penalty. And if the contract was cancelled in the final 12-months, the penalty was 6-months of service charges.
After adding up this long list of expenses, do you still want to end the lease early or just bite the bullet? Weigh your choices. Assess the costs involved. There may not be an upside.
The bottom line is always NEGOTIATE! “Everything is negotiable if only you ask.”