Lack of access to capital to purchase equipment has stymied many manufacturers over the past 18 months. It has been at least that long since the subprime mortgage crisis and a stagnant to reeling economy sent banks and other financial institutions in retreat from providing monies for capital purchases. And while the hope is -- and tentative signs are -- that the economy is improving, experts suggest that money may remain challenging to come by for many businesses. This presents a dilemma not only to potential purchasers of new equipment, but also to sellers. If a potential buyer can't find financing, a potential sale walks out of the door.
Videojet Technologies Inc., a business of Danaher Corp., aims to stop those potential buyers from walking out the door. The manufacturer, which makes variable data marking and coding solutions for the packaging and commercial printing industries, has partnered with equipment leasing and finance company Direct Capital Corp. to provide financing solutions for interested buyers.
"In a way, it's one-stop shopping," describes Videojet Vice President of Marketing Adrian Fernandez. "We want to make it easier for the customer to buy from us."
Fernandez is confident the financing option has gained the company sales it otherwise may have lost. Customers who employed the Direct Capital option "either would have had to walk away or find their own financing opportunity," Fernandez notes. "Maybe they could not have bought equipment from us."
While Videojet is not the only manufacturer to offer financing arrangements, it promotes the development of an integrated relationship, such as the type it has established with Direct Capital, rather than offering what amounts to a referral service. "Otherwise you can say, This customer needs financing. Here's the business card of a guy at this bank. Good luck,'" explains Fernandez. "That's easier than spending the time and putting a process together, but at the same time it may not work anymore with the same level of success we have with this kind of partnership."
What Fernandez means by an integrated process is one in which the financing discussion is brought to the table early in the selling process. When interest in financing is expressed, Direct Capital is brought on board and becomes a partner in the process as it moves forward. The integration is easy for the customer to see and follow, Fernandez explains. It's not two entities speaking with one voice, but it's not far off, he says.
Interestingly, the process Videojet used to develop its integrated selling and financing procedure with Direct Capital (whom it has partnered with since February 2009) mimics the process Danaher uses to roll processes out to the factory floor. As Fernandez explains, before the offering was extended to customers, all the necessary parties were brought to the table, from sales and accounting on Videojet's side, for example, to Direct Capital's counterparts. These parties drew out what the process looks like step by step, identifying the various actions that needed to occur. They agreed on the process, documented it from the beginning of the sales cycle to the end, created standard work around it and then trained everyone. They piloted the process, determined that it worked and then rolled it out.
"That's the normal standard work that we follow in any kind of process implementation at Danaher," Fernandez says. "We use a tool called value-stream mapping. It's one of the tools in the Danaher Business System tool box."
Both Fernandez and Paul Ringuette, Direct Capital's vice president of sales and marketing, say they are beginning to see an uptick in demand for capital equipment purchasing. Both want to reap the benefits of that uptick. "Lining up a partnership and being proactive, that's important," Ringuette says. Fernandez adds that being able to offer financing options in addition to a persuasive product line, "is a pretty compelling proposition."
Tips on Accessing Financing
If prognosticators and early signs have it right, U.S. manufacturing activity is poised to improve in 2010. For some manufacturers, that means it is time to reinvest in capital equipment, even as financing remains tight. Dan Kramer, senior vice president and chief marketing officer of specialty finance company ICON Capital, offers several tips to manufacturers in search of financing:
Dan Kramer, senior vice president and chief marketing officer, ICON Capital