Office equipment purchase decisions normally revolve around price and technical competence. Rarely is the financing partner a significant factor in the decision, but this choice can have an important impact on customer value and satisfaction.
In most cases the buyer has no choice other than large third party finance companies. The lease can be done directly with the leasing company or indirectly with the dealership using a private label program. Some large MFP providers offer their own leasing program through their independent captive. Captives offer distinct advantages in provider responsiveness and program flexibility while being cost competitive.
Captive arrangements bundle MFP service and equipment financing with both sides focused on customer satisfaction. There is no finger pointing or hiding from responsibility. Unlike third party leasing arrangements, clients can withhold payment if service levels are unacceptable. This gives the customer greater leverage resulting in a higher level of vendor responsiveness.
In comparison with large leasing companies, Captives may be more flexible with Terms & Conditions for small clients. Agreements can be customized in regards to the term, timing of billings, maintenance specifications, warranty provisions and other items. In addition, Captives are less likely to charge fees or penalties for lease add-ons, volume adjustments and lease rolls.
Captives may be able to establish higher residuals resulting in lower lease rates. Since Captives are MFP vendors, they are in a superior position to maximize value in for used equipment. Depending on its condition, returned equipment can be leased again, used for parts or deployed as rentals. Large leasing companies usually have to resort to wholesale vendors and don’t have these higher value options.
Captives can lower credit risk and losses. In many cases, the Captive is intimately familiar with the customer and their credit history through the past client relationship. This market information can result credit losses far below the experience of large leasing companies.
Captives have lower staffing costs. The expense of sales and sales support in large leasing companies doesn’t exist in the Captive. Since the Captive operates within the dealership, it largely avoids the additional overhead burden necessary to big firms.