Leasing 101: Learn the Basics, Increase Your Sales

B y Corey Saftler President, Integrated Leasing Corp.

When I try to explain what I do for a living, the response I normally receive is, "Why would anyone want to lease a piece of equipment that's so inexpensive in the first place?" It's a very good question, and the explanation should help you increase your sales and increase your merchant-acquiring base.

Leasing, simply put, is a three-party understanding among the leasing company, the salesman (ISO) and the merchant.

The leasing company agrees to pay the salesman immediately upon installation of the equipment at the merchant's point-of-sale.

In exchange for this payment, the merchant agrees to pay the leasing company a mutually agreed upon nominal monthly payment over an extended period of time (one, two, three and four years).

The leasing company is, in effect, granting a loan to the merchant. The leasing company pays a lump sum to the salesman (ISO) that covers the costs of the equipment, marketing fees, installation fees and sales commissions.

Back to the original question. The average merchant is an expert in his or her individual field and intends to produce a product or service that should produce a profit daily.

Rather than spend a larger lump-sum payment for equipment, it becomes a much more economically sound investment to lease the equipment for a much smaller monthly fee and use the cash savings to invest in inventory, advertising or anything that helps make the profit greater.

The concept of conserving cash so as to create a greater profit is a time-tested philosophy used by the largest corporations in the world. To not apply this sales concept would be selling you and your merchant short.

The ability of the merchant to conserve cash and apply it to a more profitable use that would roll over many times far outweighs any negative effect of the nominal carrying charges of the lease.