Welcome to episode #8 of the Smarter Business Finance Podcast.

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Transcription…

Rob: 

So welcome back to the show everybody.

Today we’re going to talk to an industry friend of mine, Craig Colling and he’s with a company called Paramount Financial.

Now they’re a direct competitor of ours and you might think I’m crazy for hosting a competitor on the show…

…but when I started the business lots of folks thought I was crazy to tell people the truth about the rates and that’s worked out pretty well so far.

So I think it’s important to give you other perspectives and someone who is a good guy, I’d like to welcome on the show.  So here we go, here’s the interview…..

Rob: 

Okay, everybody we’re here talking with Craig Colling of Paramount Financial and Craig is actually a competitor of mine, but we share a common goal and that’s bringing transparency and education to the industry and more importantly being very passionate about whether someone is our customer or not – not letting them get screwed.

So Craig can you tell me a little bit about Paramount and you and your experience in the industry?

Craig Colling: 

Absolutely Rob and first up thanks for having me on the Podcast.

You and I connected about 2 years ago, I was – we connected on LinkedIn, went to your website and with a breath of fresh air, I just want to give you that compliment in terms of how you represent the industry except for how you and I connected.

There needs to be, in general we talked about it a lot, just more transparency, the vendor side, the customer side.  So I just want to start up with that.

I’ll give you a quick background of myself and Paramount.  So we’ve been in operation since 2000.  I’ve actually been with the company since ‘01.  The name of our business is Paramount Financial Services, we are both a direct lender and a syndicator or broker for all types of equipment, and so we fund typically somewhere between $20 to 50 million in equipment a year.

So we’re not… you know… the biggest dog on the block but we’re – we’re definitely pretty well known in the industry, specifically on the vendor side of the things, (vendors that refer leasing financing to customers) and we focus on several different industries that we’ve had a lot of success with.

So we’re not involved in, as you know, there are so many industries you can finance, we’ve done about 4 or 5 that we focus on.

My own background I’m a – to those listening, I’m a UofA grad Go, Go Wildcats, I don’t know if any listeners or attender went to UofA in Tucson, right out of school started in the leasing business.

My father was in the computer leasing world, that’s how I had an interest in this business and it’s fun, you know, it’s challenging, you learn something every day, you’re negotiating with CEOs, CFOs and equipment suppliers, so you learn a lot, you learn something every day.  So that’s a little bit about myself and the company.

Rob: 

So Craig, what are the industries that you – you mentioned four industries.  What are the industries that you – you have the most knowledge in or like to specialize in the most?

Craig: 

Yeah, happy to share that.

In Paramount as a company we technically could finance any type of equipment but mostly seeing guys, I talk to, they focus on a few industries try to get some traction in whether that’s attending trade shows or networking events, because the better you understand the equipment, you are financing the better – the more value you’re adding to your vendor relationship, the people that are selling the equipment.

So we’ve done a lot in the medical industry so X-rays, X-ray systems, hospital medical equipment, also med spas, so lasers – medical lasers, IPL devices, all sorts of devices in that industry, and everything associated with the medical spa too.  Also the furniture, the sign for the building that we have a lot of traction with specific vendors there, we do a lot in the printing and embroidery world as well.

Laser engraving, printing, embroidery machines that industry we find to be more competitive, but we’ve been at it for 10 plus years.

So you develop a few key partners and that drives a lot of our business, we go to a lot of trade shows with some of those vendors and support them at shows, and also fitness.  So treadmills, free weights, so that’s a very mature industry as well in terms of well-known in terms of customers can secure financing through banks and of leasing companies but we have you know we go to a lot of those conferences as well.  So I could rattle up few more but those are the probably truthfully drive about probably 50% to 60% of our portfolio, our business annually.

Rob: 

Okay.

You know Craig, there is a – the first question to anyone who’s in the industry gets asked by somebody else in the industry …and I’ll define these two terms for the listeners…

…but the first thing I’ll get asked is, “do you do end user business or vendor business?”

End user business is kind of what we do a lot of, although we do a lot of vendor business.

But end user means somebody who is not coming to you through the seller of the equipment like add a dealership looking to buy XYZ equipment and just a referral, where vendor business literally is that referral where someone shopping and they say “Well do you have financing?” and they get handed an application or a link to a website and in the industry link oh, that’s referred to as vendor business.

So are you end user shop or a vendor shop or a little bit of both?

Craig: 

At this point, that’s a great question and I’d love to share more on that idea as well.

We are a vendor shop, so I would say no exaggeration, 95% of our business is referred by equipment manufacturers or dealers or sales team literally spends their day, cultivating you know calling and connecting with equipment suppliers to try to create referral relationships.

We started out as an end user driven business -literally we were cold calling small businesses all day.

“Do you need financing, yes or no?”

You know obviously help a little bit more than that but just a simple question to across the businesses and then sending them you know a fax or an email with their information.

The reason why we transitioned to being a vendor driven business is because, when you have that vendor partnership you have a higher likelihood of essentially facilitating the transaction for the clients because you’re referred.

There is an inherent trust there, but that trust is earned, so now the leasing company myself and my company we’re now accountable to both the customer and the vendor to provide a high level service to retain that relationship.  So we take pride in as you do Rob, doing business is a right way to cultivate those relationships and keeping them that’s the key right, and we can talk more about that today.

Rob: 

Okay.  So if a vendor is looking for a financing partner what sort of things should they be looking for, are there kind of some may be three to four key things that are the most important that you need to look for in that relationship?

Craig: 

Absolutely and it’s — I really empathize for equipment suppliers in terms of how do you decide who, it’s such a big decision.  I mean, number one the key question if you’re an equipment supplier, dealer, distributor.

Should you even offer financing or should you just say, “You know what Mr. Customer, Mrs. Customer, find your financing on your own.  I don’t want to deal with that” and that’s we actually face that a lot when we interface with vendors, they’ve either had a bad experience or you know they just don’t want to deal with that side of the business.

So that’s number one is, the first question is do you want to even offer financing.  Most vendors that I deal with ultimately finance is yes, because essentially you are probably retaining and closing more sales versus if for example, if a vendor’s competitors offer financing and you’re not that you may lose a sale over not offering finances, so the biggest number one is, should you offer financing?

I would say yes, I’m biased, I know you’re biased as well, so that’s a key question.  After you got out over that hurdle, then you deal with a bigger hurdle of who do you work with.  I mean they probably get solicited daily more than once a day from banks and leasing companies like our companies and other lenders.

So how do you decide for, so I’ll answer your question.  I would use tremendous due-diligence.

I would research some basics like Better Business Bureau, Manta, and I would actually Google the name of the bank or leasing company along with –Ripoff Report and see if anything shows up, less the better in that example.  I would also be wary of companies, banks or leasing companies, but most of leasing companies that are newer in business, less than five years and not that that’s a bad thing.  I don’t want to discredit newer leasing companies, we all start somewhere but more experienced the better.

I would also; another point would be to ask the equipment leasing or finance provider for pretty detailed reference sheet.  Who – if you’re a broker, who are your funding sources?

Number one, if you’re a direct lender outside of who your funding sources are have a very good understanding of where their money comes from? Are they a bank?

Do they secure money from private equity and then more so with references ask them for other vendor and customer references that you can call and interview yourself to identify what their experience and of course they are probably going to provide references that give them a good reference but you never know.  You may learn some things about them, so there is some initial things you should do.

The other thing I’d mention is before a vendor locks into a contractual relation with a lender, or even a long term referral relationship the first few transactions, make sure that they — essentially make sure they’ve got nothing to hide.

I actually what I say to my vendor relationships is I’m going to with the customer’s permission CC the vendor on all communication.  See how that leasing companies communicates with your customer, see what their rates are, of course they are going to provide you a marketing sheet with what their published rates are, but Rob as you and I know there is the A paper rates and then there is the B, C and D rates that go along with different types of credit profiles we can finance.

Rob: 

Absolutely.

Craig: 

So it’s very important in my opinion for that vendor to have a very good understanding of all communication that’s happening between leasing company and customer rates, terms, documents and thing – all of those things, and then the most important thing if I’m a vendor is, how are they going to get paid.  So for example, some brokers not all but some brokers don’t have the ability to offer any pre-funding.  They don’t have the ability to pay a vendor before they ship.

Rob: 

Sure.

Craig: 

Most vendors I’m – I know you have this experience as well.  Most vendors I deal with they require some type of funding upfront whether it’s 50% or sometimes even a 100% before they ship the equipment.

Rob: 

Absolutely.

Craig: 

Even if a customer was in financing the customer would have to pre-pay at least a portion before they could even ship.  So very important last point to make is, make sure you understand the leasing company that’s soliciting you that wants to work with you, how do they do business, what is their process, and a good leasing company should everything I just commented on in terms of questions, red flag would be – if they were resistant to any of those questions.

So if Rob – Smarter Finance or Craig was dealing with, myself was dealing with a vendor we would love to provide that information that’s going to show that vendor that we know what we’re doing and we’re excited to work with them.  So if there is any resistance, any of that specifically on the transparency side, you know, that would be a red flag to me.

Rob: 

You bet.  One thing I want to touch on, you mentioned an important question for a vendor to ask being where they are getting their money from? Can you expand on why they should care and what’s important to look out for?

Craig: 

Yeah, that’s probably other than you know – making sure you’re leasing finance partner is an ethical group that’s next – that your question about being whether they are a bank, direct lend and/or direct lender or brokers it’s just important to understand.

I do want to – I always I find it interesting that the word broker sometimes gets a negative connotation in our world like consumer world, mortgage broker, finance broker it doesn’t have to be.  It’s just understanding from a vendor’s perspective; just understanding the lender’s programs, rates, the terms and process is what I focus on when I speak with vendors.  So what a vendor should be asking a leasing company is, if they were a bank which all of us as consumers think, “Oh they are a bank, that’s a good thing”.

Yes and no, so we assume and it’s probably a safe assumption that a bank will offer very competitive rates to their customers, that’s a good thing.

The challenge though that a bank may have and this is why some vendors have more than one funding partner, a bank being one of them, is the banking gets that AAA credit transaction done within a very low interest rate, probably similar to mortgage rates say somewhere between 5% to 7%.  But they probably don’t fund the start-up business or the challenge for credit.

So then now if you are the vendor and you only partnered with a bank, you are probably turning away a lot of transactions, you may lose business.  So that’s one challenge with maybe a bank only partnering with a bank.  A direct lender could mean a variety of things, a direct lender could be a bank, a direct lender could be a company similar to my company Paramount, where you have a partnership with a private equity firm.

So your money is not coming from a bank, it’s sourced through private equity where the cost of funds could be just as low as a bank, you know in that say 5% to 7% range.  But the key there with the direct lender is same thing, what credit profile are they going after, whether that be only high level credits or is it also new businesses, challenge for credits and then the brokers, so I am going to take a positive spin on the broker world.

If I was a vendor and a leasing company calls you and they say that they are broker, don’t assume it’s a negative thing.  They may be able to source bank products along with the syndicated products through which are funding sources for brokers where they can source money for all types of credit profiles.

So in reality, depending on the leasing company you partner with, you may have two, three, or four partners depending on the credit window that you need to serve or you can partner with, you know a company that serves the entire market, you know, not every leasing company would like that.  So that’s something that, so just in terms of the different challenges in those markets and we have to understand the difference are.

Rob: 

Yeah.  And I want to actually touch on that a little bit more, because one of the things that seems to come up a lot, there is a lot of folks in this space that say, “We’re direct lender” and that’s part of their pitch, to you as a vendor and I would say 90% of companies that say that we’re a direct lender they may fund – be the direct funder for 20% to 25% of their transactions, but because there are so many different ways to slice transactions and so many different types of equipment that are restricted by some lenders and not others.

Number one, a vendor usually is not best served dealing with somebody that only funds their own transactions, because if they’re running their portfolio properly, they are going to turn down probably twice as many as somebody who maybe funded some of their own transactions.  But also had a healthy network of what’s called partners or what’s called a discounter.  And I don’t want to get too technical but in general most folks that tell you they are a direct lender are only sometimes a direct lender, would you agree with that?

Craig: 

Oh yeah I’m smiling as you’re explaining, because almost every leasing company website I go to or run into a trade show, the first thing they market on their marketing material is they are a direct lender and you’re exactly right.

That’s not that that’s a false word, they are on some level, but maybe like you said only 20% to 30% of their portfolio.  Taking that even a step further, if I was a vendor I wouldn’t even necessarily care where the money is coming from, whether it’s sourced by a bank or if it’s another partner or the leasing companies focus on the rates, focus on their process, focus on their service.  Ultimately the client, the end user probably doesn’t care who is invoicing them every month for the monthly payment, but they extremely care about the interest rates they secured and the service they’ve – you know, they were provided.

So but I agree, I think in reality, most of these guys that we all — we run into a – we’re all syndicating on some level which is actually good business, it’s good to diversify your risk and even Paramount my company, I would say we’re 50% to 60% direct, you know the remaining 40% syndicated or brokered and we have nothing to hide there, we view that as a good thing…

Rob: 

Absolutely.

Craig: 

…begin able to…  so.

Rob: 

Yeah.  So one of the – as you know, listening to the program, one of the things we highlight a lot because it’s – one of the biggest questions, challenges and problems that people have when they’re shopping for any sort of business financing or whether a vendor is looking for a partner, any customer stories you can share about sellers or customers being scammed, and what to look out for?

Craig: 

Yeah, I think that’s an important thing to touch on and actually all of us, customers, vendors and leasing companies, finance providers quite frankly even though sometimes it feels like we’re working against each other, we actually should be working jointly to sniff out fraud and make sure that no one is getting harmed, vendors, customers or leasing companies because it affects all of us.  I will give you an example of really a tough situation we ran into recently in the last year and, you know, it was a vendor committing fraud.  So I won’t name the name, I won’t name the customer name, because that’s not appropriate, but ultimately he was a vendor that was marketing themselves as a distributor of a photo booth product.

So for those that don’t – that maybe attended a wedding or what not it’s you go into the kiosk, you take some funny pictures, it prints out your pictures and that industry for example, you know whether they are event planners or even photographers will acquire these machines and then rent them for weddings and other events like that.  So it’s a lucrative, it’s becoming an up and coming industry and, you know, lucrative for those that are already in that space, you know who are doing weddings or event planning.  Long story short, we had solicited a variety of equipment suppliers in that industry.  We developed some partnerships, one of them without naming the name, good looking website, we did a research on their company, just everything I said earlier on this call, this interview you know in terms of their background, Dun & Bradstreet, Better Business Bureau, everything came up normal and good.

And that’s actually important point too that leasing companies, Rob’s company, my company, we credit, we do a credit research on the vendor just almost as much as the customer.  We want to protect our customers to make sure, you know, they are not running in the challenges to the best of our ability, but long story short, a fraudulent scenario well, I guess I’ll defer to Rob if he thinks it was fraud, customer agreed to buy equipment; we agreed to finance it, vendor agreed to ship it.  We facilitated the contract you know as quickly, client received the equipment, so here is the problem, it was our first transaction with – and this is a lesson for leasing companies listening as well.  The vendor required a 100% full payment.

We as a direct lender and even our syndication lines we have the ability to pre-pay vendors as Rob’s company does as well.  We honored what the vendor wanted and the customer agreed to it.  It wasn’t anything, you know everyone was in agreement, we prepaid the vendor, the vendor shipped, here is where it gets squirrely, essentially the vendor did not ship the customer exactly what he had requested.  It was essentially a knockoff, it was the website looked like this wonderful piece of equipment, essentially it was something that should have been retailed $10,000, what they received was a knockoff from China that was probably, you know worth $500 and it was clear from a basic web search after looking at the equipment, where they got it and not what the client agreed to.  But the challenge we faced and we worked out a resolution which I won’t get into today is the vendor was prepaid and then at that point the client was on you know on the hook and they contractually know they were, but they didn’t get what they want they agreed to, and the vendor being unethical wasn’t willing to make any changes.

So whether that’s fraud – I think that’s a good example of my point of that story and I think it’s very important to share that story is.  If you start a new vendor relationship where you’re working with the vendor for the first time you may want to guide your customer because to say, you know what let’s not prepay this vendor.  This is the first, be honest and say this is our first transaction with this vendor.  We want to protect you and us from any – you know, what we should have done in hindsight is only offer 50% maybe, you know, most vendors require some money down to make sure that everything was on the up and of course now we don’t work with that vendor, the customers not mattered us, he’s made up the vendor but ultimately that was a good – good learning experience.

We’ve had other situations I won’t go into too much depth like the last comments, but just outright fraud, where the vendor and customer were working together and a red flag is when a vendor solicits us, you know just randomly, again our business is an output to facilitate relationships.  So when a vendor is calling us aggressively to work with us, just another red flag to the leasing broker and finance community.  That’s a red flag at least to us.  Ultimately, we had some situation we’ve been aggressively solicited by a vendor wanting to do business with us which as you can imagine, sales people love those endowment calls in general.  But that led – we’ve had some situations where a vendor and customer were in cahoots and everything was fraud.

There was no equipment involved and we sniffed it out before we released any monies and we notified and there are some great industry watchdog groups, there is one called Lease Police, I think it’s just leasepolice.com where you can actually report you know bad behavior on both vendors and customers and if you’re – I don’t work for them I’m not – I’m only promoting them because they do a good job.  But there’s groups like that, that you, if you’re affiliated with them and you’re running your first transaction, you could do some due diligence and see if a vendor or a customer has a rap sheet I guess is a way to describe it.  So the good news though Rob, to turn into a positive thought is you know 99 out of 100 transactions are normal and good.  It is rare we run into truly unethical people but those are the challenges that we do face and the risk we face as both being in the lending industry.

Rob: 

Sure.  So when a vendor is looking at a leasing company as you and I both know it drives us both insane, that I know that I get plenty of calls from folks that either have been ripped off by a leasing or equipment financing company or pretty sure that they’re going to be ripped off but they’re not quite sure and they just want validation.  How can folks avoid that?  How can folks sniff out other than just looking at you know obviously you can look at the BBB or you know plus company plus scams, any other tell-tale signs that you see your customers run across that says be careful of these guys.

Craig: 

Yeah.  You know and you and I have talked you know just in general about the challenge in our industry, one thing I’ll share to your listeners is, the challenge that Rob and I face and others is that I’ve made this all clear and take it very seriously, there’s not that much barrier to entry to becoming a leasing or finance broker which is a negative, right, because in general more licensing, you know you’re going to hopefully weed out more bad apple.  So unfortunately Rob and I have talked about it quite a bit.  There are a lot of good apples but there are unfortunately we both are into lot of bad apples that just flat-out lie in terms of what rates, in terms of level and what programs are available.  So with that in mind and I do have some tips for your listeners, especially customers that are, maybe right now negotiating a lease with a leasing company or bank.

Number one, don’t ever sign a, I call it a pre-close letter or some leasing – some bad apple leasing company will send out a they’ll call it a commitment letter or preapproval letter and they’ll ask you to sign off on this wonderful interest rate of say 7, 6, 7% which is really low in our industry and then – but in the fine print of that proposal they’ll say, if we can’t secure this approval and the payment comes back and it’s equal to 30% interest, we’re going to keep your $1500 deposit and that’s just how it is.  So number one to give you tips to listeners is good ethical leasing companies like Rob’s company, my company and many others don’t require any type of pre-documentation or initial monies up front.  That’s a red flag, if someone is asking you to sign something like that, especially asking you for money, the answer is no.

You will only provide a deposit with the final contract and taking that a step further to protect your listeners from being robbed.  Make the lender, leasing company whatever it is, bank leasing company, put in writing that if you send them a deposit, even with a signed contract and if that customer ultimately decides not to acquire that equipment for whatever reason, a good leasing company will return their money.  I mean, even contractually even our contract says ultimately we have the right to retain the deposit but there is the letter of the law and then there is a spirit of law, and if you want to cultivate good customer relationships, you’re not going to keep someone’s deposits unnecessarily.  So it’s, I guess red flag number one, please don’t…

Rob:

Let me bring something up, because some of our funding sources do in fact after a preapproval…

Craig: 

Sure.

Rob: 

…require a prepayment of doc fees, but it’s usually not thousands or it’s never even $1,000.  Usually, you know it’s typically, $300 to $500 and that’s before putting something into several hours of underwriting to the documentation.

However, what we do with our customers when we are asking for any upfront money is we spell out in writing and not in some legal lease that nobody but a lawyer can understand is literally, if we cannot fund this transaction or cannot fund this transaction at the price we tell you or for any other reason other than you, like for instance, if you get the documents and you back out, yeah, you know that, you know several hours worth of work to get a transaction to the finish line it doesn’t close.

You know, usually, 99% of the time we well, let me say, we have never once kept a document fee ever.

However, there are a lot of ethical brokers out there that ask for a few hundred dollars and documentation fees oftentimes because their funding sources are requiring it, but first and last payment plus fees is really a big red flag.

Craig: 

Couldn’t agree more and I appreciate you adding that clarification, you’re right.  I mean a nominal documentation fee in certain circumstances and actually some like you said some underwriting banks require that, that’s normal.  I’m talking about the extreme asking for a $2,000 to $3,000 security deposit for finance, $30,000 an equipment up of a two paragraph, you know, proposal letter.  So yes, I appreciate you clarifying that.  That’s they want to make sure we’re not disparaging those that are doing business the right way, but just as they’re more important, when you do receive another comment or red flag to share is, when you receive that final contract from the leasing company, you know, I hate to say it this way, but be skeptical.  You know, send it to your accountant and/or your lawyer to review the both the financial and the legal terms.  Make sure you have I mean, I’ll criticize myself I mean, I’ve signed off on a mortgage where I didn’t read off 30 pages, you mean, you just assume everyone is working your best interest.

So I’m just as guilty as customers that don’t read the fine print.  So I guess my point is, read the fine print and then you know especially with not your expertise, I mean you are not a contract lawyer, you know send it to a professional, even send it to, what I read about Rob – Rob is he’s got his website and his company.  He and I would do the same for any customer, even someone that’s not our customer.  You know, just as an advocate in the industry to help people.  So just lean on a – someone that is in the industry or someone that’s a legal profession make sure you’re not, there is no evergreen clauses meaning leases could be auto-renewed, make sure you understand the buyout of a lease.  I won’t get into too much of that on this discussion but whatever you were promised in terms of how the lease will end, make sure that’s what the contract reflects.

Those are just major red flags and then my last point on that is, just trust your gut.  I mean, the way Rob does business, the way I do business there is no pressure, we’re trying to educate people and we want your business but we’re going to present our terms and get you the best that we can and we have to make profit as well.  But you’re not going to be – we’re not going to create pressure.  So if you’re getting, you know, that high-pressure sales tact tech maneuver from the vendor or the leasing company, probably trust your gut and back away from that deal, something is probably not right and I should, you know, that’s how I operate myself in my own consumer life.  So those are few points Rob on that topic.

Rob:

Absolutely I agree.  So speaking of profits, on the vendor side, so vendors going to get together with an equipment leasing or financing company, should they expect kickbacks?

Craig: 

Great, great question, and actually it’s a huge challenge we face as we create vendor relationships.  Should a vendor black and white expect kickbacks, I would say in general no and let me explain that answer.  And by the way it’s a debatable point, I am not – I don’t think I’m right on everything that’s for sure, that’s my way.  But in general, if you’re a vendor and you’re asking any leasing company for a commission or referral fee or whatever you want to call it, keep in mind that has to be built in somewhere.  Most likely the leasing company is not out of the goodness of their heart paying you a fee out of their own internal commissions, most likely they are building it into the sale.  So, for example if the interest rate would have been, I’m just going to make up a number, if the interest rate for the customer would have been 8% and you’re asking for a $500 fee or $1,000 fee from the leasing company which they can agree to pay most likely your customer’s interest rate is going to go from 8 to 9 or 9 and a quarter or whatever the effect on the rate is.

So with that in mind, what I always talk to vendors about and have a honest conversation is, can the leasing companies and could Paramount and could Rob’s company could we pay your referral fee, yes we could but the money is going to come from somewhere.  Now that being said, should a vendor be rewarded for a referred business? I think so and there is other ways of doing it.  For example, you know, vendors equipment’s, players exhibit at trade shows.  You know, they exhibit at a trade show, even a small biz, a 10*10, could cost 5, 10, $15,000.  What about you know, in another way of – to supporting your vendor is, and contributing to that booth, I mean if they are exhibiting their equipment and they are going to be referring you their customers, that’s the way to invest in your vendor, and not only pay for it but be there, be present to help them facilitate sales.

And we do in – in Paramount we do contest, you know, whether it’s monthly or quarterly and, then you know, give cards to vendors and sales people of course all are approved by the company.  So in general to answer your question, I mean, it is common I would say very common for vendors to ask there’s nothing negative about it.  I mean there is no rules in our industry about paying vendors a fee, but we just take an honest approach of we can do it, but it’s good to – ultimately it’s going to be more expensive for your customer, most likely therefore let’s do it in other ways.  And most vendors will have, be that as reasonable, but we do pay referrals fees? Yes we do, and in a certain relationships whether there is high volume and vendor should be rewarded depending on the circumstance.  So that said, a lot along with an answer there but there is a lot to that topic, absolutely.

Rob: 

Yeah.  And, you know, I’ll just add for, I know that some brokers probably who are new in the leasing business, who are going to be really excited when they first get their vendors to talk to them.  I remember those days where you just couldn’t believe, you finally got someone to talk to you, right?

Craig: 

Right.

Rob: 

The vendors to be little bit skeptical of are the ones that immediately start like their first to second question will be how much you’re going to agree some, those are the guys you want to be, and also Craig, also touched on the vendors that are just coming after you, think about like an online dating thing.  I’ve been married a long time.  So I haven’t thought about that in years and years and years, but if you are doing online dating and someone who barely knows you is coming after you, and coming after you, and coming after you, when you know they have 1,000 other choices that’s something to stay really clear of and what I found is are really good vendor relationships.  Sometimes compensation gets brought up, I mean definitely, I mean everybody is in business to make a profit, but it shouldn’t be the first thing on their mind and that’s where you should start really sniffing that.  Oh! I don’t know about that, you know, and I know it’s tough,  if you are struggling and you desperately need the business, but when they are coming right at you, how much money you are going to pay me, that’s you know really something to be stay clear off.

Craig: 

I’m really glad you pointed that out, because going back to earlier part of this conversation you know, what vendor should really be focused on is what are the lease companies rates, process and service, right? How are they going to benefit my business? If it’s solely about compensation and they don’t really necessarily they may don’t care about the rates, service and then that should be a concern, that you are probably going to reflect on the customers that are referring to you and the type of, you know transactions you’ll be running into.  So couldn’t agree more, definitely a challenge now.  I empathize that you said that newer brokers and newer sales people we’re all hungry for business.  So that’s a challenge you don’t want to turn away an opportunity that’s definitely tough, a tough one, we struggle with that at Paramount, keeping those vendors happy.

Rob: 

Absolutely.  So any other tips for the listeners, anything our listeners would have a better day if they heard.

Craig:

Well, yeah.  I leave with this parting thought just in terms of – since this discussion was about you know, vendor business and the leasing companies associated with vendors, I leave your listeners with this last thought.  If you are working with an equipment supplier and they refer you to their leasing partner of course, you should consider them, but out of your – basically to keep them honest and also get yourself the best deal, get some outside quotes and be very vocal about that to both your vendor and your leasing company.  To be especially if the leasing company was referred, because I’ll tell you this right now and I’ve won a lot of vendor relationships doing just this.

If customer Smith and John Smith gets a second quote from Rob with Smarter Finance and Rob beats the existing leasing companies rates that vendor is going to be highly interested in working with Rob or Craig at Paramount.  So to keep – to get you the best deal you can and keep everybody honest, get more than one quote, don’t just go with the vendor’s referral to the leasing company.  You know, get some other quotes, get yourself the best deal and, you know, keep everyone competitive.  So I leave, Rob that’s my parting thought and I really want to thank you for having me and really enjoy and appreciate what you do for our industry.

Rob: 

Awesome, awesome.  Thanks for coming on the call, Craig.

Craig: 

You’re welcome.

Source:  http://www.smarterfinanceusa.com/blog/equipment-financing-partner