Along the way, there are a great many pitfalls to avoid when choosing the right asset finance partner. Lee Schofield, of PMD Business Finance, explains why factors should think about asset finance and what to look out for when making the decision.
One of the most important aspects of providing point of sale finance for motor factors is choosing the right partner.
Ultimately, providing a competitive and transparent point of sale solution enables you to increase sales by making it easy for the customer to say yes.
For your customers, business finance can preserve capital, ensuring there is cash in the bank for a rainy day. The right partner will use their experience and knowledge of the industry to ensure your customers are getting the best deal.
However, there are certain pitfalls to be aware of, says Lee Schofield, Sales Director for PMD Business Finance.
Lee has worked in the industry for 10 years and in his role at PMD, he works closely with one of the UK’s leading parts and automotive equipment suppliers, providing point of sale finance solutions.
Lee said: “At PMD, our expertise in the industry means we know exactly what challenges and hurdles our clients are facing, and it also means we can identify opportunities for them. We build trusted, long-standing relationships with our clients and we use our experience and knowledge of the industry to support them – being there every step of the way.”
Along with building strong working relationships, Lee says transparency is key when it comes to working with a finance partner.
Lee said: “In order to ensure firms get the best deal under fair terms, there are certainly a number of warning signs and red flags to bear in mind. Unfortunately, customers can easily be misled when it comes to asset finance.
“However, a good starting point is to look at what is being quoted and to ensure you understand it fully. It is important to bear in mind that a quote is just a quote – it is simply an indication and might have even been offered before being given the green light – it is not a final deal by any means.
“We have worked with clients in this industry for a number of years and unfortunately we have heard many horror stories when firms have received a quote which initially seemed cheap, but then at the eleventh hour, it either turned out there was a big deposit or the rates were hiked up.”
Lee added: “Another potential red flag to look out for is whether it is a fixed-term document or a minimum-term document. A fixed-term agreement will typically have 36 or 60 payments, and upon ending is stalled and will not renew. However, some companies use minimum-term documents. These documents roll on if they are not cancelled and can lead to unnecessary high costs. Ensuring your agreement is fixed-term, rather than minimum-term, is absolutely key.
“Something else to be aware of is quotes that are based on tax benefits. Remember that you are not dealing with an accountant; they do not know your tax position. Therefore, to offer a quote based on tax is misleading, unprofessional and bad practice – but unfortunately, it can happen.
“To safeguard yourself against any of these issues, make sure you are dealing with a credible finance provider that works with reputable suppliers and has experience in the industry. Be aware of smoke and mirrors – make sure everything is completely transparent and that you understand exactly what is being quoted.” Lee added: “At PMD, we can offer total flexibility and independence as we have access to 40 different funding lines, as well as our own lending book. As a firm, we are lending in excess of £90million each year and this level of volume means we get the most favourable rates from our funding partners, allowing us to pass these savings on to our clients.
“Our reputation as a trustworthy finance provider/partner is reflected in our customer retention rate, as many come back to us because they have dealt with us before – knowing there will be no hidden surprises.
“Our aim is to communicate that there are a number of different finance options available that aren’t restrictive – businesses don’t just have to look towards the banks for financing anymore. We can turn deals round within a few days, allowing our customers to maximise opportunities straight away. Some clients have told us they have waited months for their bank to make a decision and these delays have stifled their plans, therefore missing important opportunities.
