Battening down the hatches was so FY2009/10. In 2011, your current and future customers are most likely looking to upgrade or expand. However, they may not have the capital to pay upfront just yet. This month, The Channel’s Sales Toolbox will explore the world of selling on finance – when it’s right and how to do it well. Selling for cash means the customer chooses if and when to upgrade and where to spend their money, every time. When you provide leasing options to your customers, they come straight back to you.And it’s not just cash-strapped customers who will look at leasing and financing as attractive options; leasing simply makes good business sense in many cases. Leasing enables businesses to pay for equipment as they use it, rather than paying a lump sum at the start. Your customers can, therefore, treat their IT acquisition as an expense rather than a capital purchase, and get the resulting tax break. If offered as an option at point of sale, you may be surprised at the number of customers who will choose to lease or otherwise finance their IT hardware, software or services.Listening to the leasing expertsJuri Zacest, Managing Director for equipment leasing and financing firm LeaseTech, says leasing works for both the end customer and the dealer (reseller), making it a win-win option. There will always be customers who lack the capital or ready cash to afford upgrades, but your role as a reseller, retailer or systems integrator is to help them understand that investments in IT can significantly increase their productivity and business processes, ultimately benefitting their bottom line."Businesses need to use and benefit from up-to-date technology to remain competitive, and leasing is a smart way to access to it,” says Russell Webber, General Manager for FlexiGroup New Zealand. A good lease program provides affordable monthly payments and flexibility to manage change. "Leasing can make the upgrade easier to accommodate into the business cash flow,” explains Zacest. "Hence, it is important for resellers to always present leasing as an option. After all, it makes sense to pay for the equipment as it’s used. We don’t prepay our employees three years’ wages or pay three years worth of office rent in advance, so why prepay the use of technology?”"All resellers/retailers should have a finance partner and encourage their sales people to sell a total solution that includes finance. If they do not offer finance it can put them at a competitive disadvantage in securing the sale,” agrees Webber.Once you have things in place to offer financing options to your customers, help them by taking the time to really understand their business needs and the opportunities they can find via different purchasing options. "Each customer is different and has different technology requirements. It goes without saying then that the benefits of leasing to any business should be assessed on a case by case basis,” says Paul Beattie, Managing Director at Equico. "Among key considerations is the financial viability of the customer and its ability to uphold the terms of payment.” "There is no right or wrong time to lease. Many customers have differing opinions on what is the best use of their money,” says FlexiGroup’s Webber. "Some customers choose to fund technology from their own capital expenditure (CAPEX), but many choose to pay for equipment from operating expenditure and upgrade to the latest equipment when the time is right for them. There are sound arguments to suggest that paying for and owning rapidly depreciating technology is not the smartest use of your cash.”The deals and discounts you can offer to your clients often comes down to your own size and buying power, making it difficult for smaller resellers to compete with large retail chains on hardware leases. However, Equico’s Beattie explains that there are ways around this hurdle: "Due to the business model and supplier agreement of some leasing organisations, access is sometimes available to wholesale funding, which benefits from bulk discounted rates that can be passed on to customers and can be far more substantial than a one off discount offered with loans or credit.”Financing can work for services too"Finance is important, and can be very powerful when you use a proper finance company,” says Enlighten Designs CEO Damon Kelly. Under the right circumstances, and for a solid client, you may find yourself willing to offer services, such as web design and site building, on a financed or payment basis. In fact, many clients will choose financing as an option, even if they have large cash assets – it can make better sense for them financially and in terms of planning. "It works because it changes the conversation from capital to expenditure,” says Kelly. "But I would recommend using a finance company, rather than self-funding, so the IT business doesn’t carry the risk.” Enlighten Designs relies on Microsoft Finance for its customers, but there are many other options available. Offer the option early on as part of the general sales and preparation process. Putting financing on the table can help to gauge clients’ budgets and seriousness, as well. "All projects need resource – time, people and money. We try to qualify this early on in the process, so that if budget is coming up as a potential road-blocker for a project, or the customer is talking about concerns around capital expenses, we discuss finance,” Kelly explains. Some financiers will not want to finance intangibles or software, warns FlexiGroup’s Webber. However, "some specialist financiers will look to finance intangibles and services for specific customers, but this will likely depend on the customer risk and how reputable the supplier is”. If your current financier won’t finance services and software, just keep looking. There are plenty who will, and who are experienced in doing so, reputably and professionally.