There was an obvious absence in the exhibit hall at the 2010 Graph Expo. Leasing companies. In previous years leasing companies prominently exhibited at this conference. Why not this year?
One leasing company rep whom I ran into at a party said that since his equipment manufacturers weren’t exhibiting, his company decided not to take a booth.
Was that really the reason?
I think there were possibly other reasons leasing companies didn’t come to the Big Party (the show) this year.
- Leasing companies didn’t want to face customers who were having problems meeting their current payment requirements and who might request lease restructures.
- They didn’t want to face people who they had declined previously. Industry statistics reveal that only 67% of lease applications were approved during 2009. Statistics are about the same today.
- Lessors wanted to avoid manufacturers and dealers because they were declining so many of the deals brought to them.
- They were concerned the printers who would approach them weren’t credit worthy because of the challenging economy. Most customers want restructure on their old debt and then an approval on a new equipment lease.
- Almost all digital equipment is leased today due to technological obsolescence.
- There was great excitement at Graph Expo about the newest, latest and greatest digital equipment. How are printers going to pay for it if leasing companies aren’t going to meet with them?
If you’re considering adding equipment to your business, make sure you can get approval for the financing. Before you become enamored with a new piece of equipment, find out whether your supplier has the financial arrangements to help you.
Financing Tips
Here are tips on how to prepare for the meeting with your banker or leasing company.
- Provide two years of financials or tax returns plus your current financial statement.
- Ask the printing industry associations (PIA, IPMA, NAPL) for their recommendations of financing companies that are continually active in the graphic arts industry. Some of these players have changed and/or pulled out of the market completely.
- If you have had a down year or experienced a loss and things are beginning to turn around, write up how your current situation has improved.
- Be prepared to discuss or provide the banker or leasing company with any of the following:
- Operational changes you have taken (i.e. staff reduction).
- New customers you have added and anticipated revenue from them.
- Status report on the debt that is soon to be paid off that will free up cash flow to make the new lease payments.
REAL LIFE: I recently worked with a printer who was planning to lease a $75,000 piece of equipment. He asked his current leasing company for financing, since he had just finished a happy three-year lease relationship. They declined. They are no longer leasing anything below $1 million. This leasing company had a vendor financing relationship with one of the largest equipment manufacturers in the industry for small and mid-range digital presses. Guess the leasing company wanted out of that market niche.
Moral of the Story: Don’t think you are going to rest easy because your current leasing company has taken care of you in the past. Times have changed. Find out what kind of leasing relationships your bank has. Does it either own a leasing company or have a relationship with a leasing company it can refer you to that understands the graphic arts industry.
Start early to find your money. Don’t wait until the equipment is loaded on the truck and is on its way to you. The lending climate is different today.
Final Note: You should require that all lease documents in the contract are reviewed prior to signing. Don’t let the leasing company pressure you to bypass or shorten this step.
If you don’t understand or don’t agree with something, ask. Remember, everything is negotiable if only you ask. Contact an independent lease expert for help. Of course, we would be happy to help you. Our guarantee is you save money or our services are free.
Love and kisses,
Mary
P.S. Find out more about our lease consulting and review services.