Late charges: How late is too late?
Posted on December 5, 2010
Filed Under Business, Computers and IT, Financing, Leasing, Negotiation, Printing and Graphic Arts | 1 Comment
The news is not pretty. Leasing companies are doing what they can for additional profits through the current economic down times. How are they doing it?
Fees are one way they increase their returns. And the impact to your business results in unexpected increased costs.
When you read the fine print of a new lease you are considering, please read the late fee penalty section carefully. There are two important points to negotiate.
- When is a late fee triggered?
- How much is the late fee?
When is Late, Late?
Most leasing company contracts state that late fees are due and payable on the due date. When we negotiate on behalf of our clients, we require that the lessor grant a 10-day grace period. That means that if your payment is due on the 1st of the month, you would not incur a late fee until after the 10th of the month.
You say you will never pay late so the late penalty does not apply to your company? How about lock box delays, US Postal Service holidays, accounts payable goofs, computer glitches?
Don’t be so sure this won’t happen to you.
One small ticket leasing company owner, who has been in business for 53 years, told me that when analyzing his good paying customers, he found that the excellent rated customers are late seven times in a 36-month lease. Late was defined as not paying by the 1st of the month. That is not a costly problem for his customers, as his lease contracts give customers 10 days to get their payments in.
If you are late, how much will it cost you? I learned that the newest “gotcha” is to increase the late fee penalty from 10% to a ludicrous 15%.
Let’s look at what that means to you:
Amount Financed: $100,000
Lease Term: 36 months
Monthly Payment: $3,000
End of Lease: Fair Market Value estimated at $3,000
Late Fee: 15% of payment is $450
Assume Late: 7 times late is $3,150
Increase in Total Cost: 3.15%
Rate Increase: Total lease rate was 10.77%. With
late charges 12.5%
Be careful! Heed these tips:
- Read the fine print, especially the Fees and Late Penalties sections.
- Everything is negotiable, if only you ask!
When you listen carefully, do you care fully?
Posted on November 12, 2010
Filed Under Business, Computers and IT, Leasing, Negotiation, Printing and Graphic Arts | Leave a Comment
A friend, I will call Jeanette, recently shared a personal story with me about her rededication of her life to her religious beliefs. She said she felt like she was having an out-of-body experience as she watched her body walking towards the minister in front of the mega-church congregation.
I was touched that she trusted me enough to reveal this personal experience. We had never spoken much about religion. Politics yes. Business, of course. God, not so much.
On the phone, she spoke softly about how her daughters and son-in-law were with her for that walk of faith.
I wished we had been face-to-face when she opened up to me to speak of such a precious event. To see the look of zeal and conviction in her eyes. To watch her hands and arms showing how she lifted them in surrender to God. I wondered, if as she spoke the words, did she have tears in her eyes?
What happened next is all my fault. I said, “Oh I know exactly how you feel” I interrupted her account of that big day.
I launched into a story about my own out-of-body spiritual experience. Why did I interrupt such a precious moment? Why could I not silence my own self-centered thoughts and just LISTEN! Silence would have shown how much I treasure our friendship. Listening is a gift we give to those we love.
She patiently stopped and let me chatter. However, our perfect moment was over. We will never share a moment in time like that again.
How many times do you make the same mistake? When your adorable seven-year-old comes running to tell you of the race she won on the playground, do you pause and take it in or say, “Tell me later honey, I have to make dinner.”
Or when your spouse wants to discuss some credit card charge on “meaningless junk” and you give him a look of frustration. You are daring him to continue.
None of these behavioral examples indicate the individuals have a clue about the most important communication admonition…
Listen Carefully! And its corollary, Care Fully when you Listen!
Six tips for better communication skills.
- Focus 100% on the other person when he or she is speaking.
- Stifle your brilliant retorts and remain in the moment.
- Concentrate not only on the words said, but how they’re said. Are they soft as a whisper? Do they have a tone of aggression and anger. Or are they loud and passionate?
- Observe body language. See what the other person’s eyes tell you. Do her hands speak volumes with clenched fists? Or do they rest quietly in her lap? Each gesture carries power and can reinforce or contradict the words spoken.
- Eliminate distractions out of a courtesy to the other person. Turn away from your computer. Don’t be tapping on the keyboard. Close your door to avoid outside interruptions.
- Give the other person the same respect you’d want to receive.
I teach workshops on communication and negotiations. The most important part of any conversation or negotiation is listening to the other party and really hearing his or her wants and needs. If you are a negotiator, reread these communication tips and see if they could improve your negotiations skills.
Remember, everything is negotiable if only you ask!
Will there be any money left for you?
Posted on October 27, 2010
Filed Under Computers and IT, Financing, Leasing, Negotiation, Printing and Graphic Arts | Leave a Comment
There was an obvious absence in the exhibit hall at the 2010 Graph Expo. Leasing companies. In previous years leasing companies prominently exhibited at this conference. Why not this year?
One leasing company rep whom I ran into at a party said that since his equipment manufacturers weren’t exhibiting, his company decided not to take a booth.
Was that really the reason?
I think there were possibly other reasons leasing companies didn’t come to the Big Party (the show) this year.
- Leasing companies didn’t want to face customers who were having problems meeting their current payment requirements and who might request lease restructures.
- They didn’t want to face people who they had declined previously. Industry statistics reveal that only 67% of lease applications were approved during 2009. Statistics are about the same today.
- Lessors wanted to avoid manufacturers and dealers because they were declining so many of the deals brought to them.
- They were concerned the printers who would approach them weren’t credit worthy because of the challenging economy. Most customers want restructure on their old debt and then an approval on a new equipment lease.
- Almost all digital equipment is leased today due to technological obsolescence.
- There was great excitement at Graph Expo about the newest, latest and greatest digital equipment. How are printers going to pay for it if leasing companies aren’t going to meet with them?
If you’re considering adding equipment to your business, make sure you can get approval for the financing. Before you become enamored with a new piece of equipment, find out whether your supplier has the financial arrangements to help you.
Financing Tips
Here are tips on how to prepare for the meeting with your banker or leasing company.
- Provide two years of financials or tax returns plus your current financial statement.
- Ask the printing industry associations (PIA, IPMA, NAPL) for their recommendations of financing companies that are continually active in the graphic arts industry. Some of these players have changed and/or pulled out of the market completely.
- If you have had a down year or experienced a loss and things are beginning to turn around, write up how your current situation has improved.
- Be prepared to discuss or provide the banker or leasing company with any of the following:
- Operational changes you have taken (i.e. staff reduction).
- New customers you have added and anticipated revenue from them.
- Status report on the debt that is soon to be paid off that will free up cash flow to make the new lease payments.
REAL LIFE: I recently worked with a printer who was planning to lease a $75,000 piece of equipment. He asked his current leasing company for financing, since he had just finished a happy three-year lease relationship. They declined. They are no longer leasing anything below $1 million. This leasing company had a vendor financing relationship with one of the largest equipment manufacturers in the industry for small and mid-range digital presses. Guess the leasing company wanted out of that market niche.
Moral of the Story: Don’t think you are going to rest easy because your current leasing company has taken care of you in the past. Times have changed. Find out what kind of leasing relationships your bank has. Does it either own a leasing company or have a relationship with a leasing company it can refer you to that understands the graphic arts industry.
Start early to find your money. Don’t wait until the equipment is loaded on the truck and is on its way to you. The lending climate is different today.
Final Note: You should require that all lease documents in the contract are reviewed prior to signing. Don’t let the leasing company pressure you to bypass or shorten this step.
If you don’t understand or don’t agree with something, ask. Remember, everything is negotiable if only you ask. Contact an independent lease expert for help. Of course, we would be happy to help you. Our guarantee is you save money or our services are free.
Love and kisses,
Mary
P.S. Find out more about our lease consulting and review services.
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