Tag Archives: Equipment Payment Options

The Equipment Dealer Evaluation Guide

Even if everything looks good on paper, there are still a few questions that you want to ask your equipment supplier to make sure that you get the best deal possible on the equipment your business needs. When working with an equipment supplier for your business, the goal is a mutually beneficial business partnership. Once you have made your equipment selection, by asking these questions before you ever sign your name on the dotted line, you can save yourself the headache of working with a supplier that is just not going to be a good fit.

What are my payment terms?

This has to be one of your first questions, especially because at a higher price, you might not be able to afford the equipment unless the payment terms are suitable. You also want to see if you can negotiate the payment terms. Perhaps you are able to pay a little sooner than your equipment dealer would anticipate, does that lower the price a little?

Perhaps you can make a down payment for some of the equipment as well, would that reduce the overall cost? Most equipment dealers are going to want payment within the first 30 days, but you might be able to extend this to 60, possibly even 90 days. This could help improve your cash flow around the time of your purchase.

What are my total costs?

Dollar KeySometimes the lowest quote can be deceiving – especially if it does not include a host of “additional fees” that are going to be added later. Consider restocking charges for returns, fuel surcharges, or delivery fees. Those are going to add up quickly and must certainly be factored in when considering the overall price of your order.

For example, do you have to worry about renewing your warranty? Perhaps you have a one-year service contract upon purchase, but what happens after that year is over? What about additional services? Perhaps you have to consider training costs as well. Is training even available? Are these trainings delivered in person or online?

If you want to evaluate your Return on Investment (ROI), you need to be able to factor in all these additional costs. Perhaps a slightly more expensive option is going to cost you more money upfront, but your ROI ends up being far better because of additional benefits.

What happens during a delayed delivery?

In a perfect world, everything works out all the time, there are no delays, no mistakes, and everyone always has the product in stock. We do not live in a perfect world though. So what is going to happen if an order comes in late, what is going to happen if an item is out of stock (temporarily). Are you going to receive a discount for your inconvenience?

What if you NEED that equipment yesterday and the dealer is unable to provide you with it? Does the burden of finding a replacement fall on you or the dealer? The only thing that matters to you is that you get the equipment you need, but you need to know how to anticipate for this possibility.

When do I take ownership?

Until the issue of taking ownership causes problems, most business owners will overlook this factor. Do you take ownership after a certain grace period or as soon as it is delivered? With some equipment you can tell right away whether it works or not, with other equipment, you might need a few more days to ensure that it is in good working condition.

Especially when you are still in the negotiation phase, try to include a contract clause that would provide you with three to five days before you take ownership. This gives you a chance to determine whether the equipment is functioning according to your needs and specifications.

QuestionsWhat might generate a price change?

When budgeting for future equipment purchases it is critical to get an understanding of your suppliers pricing policies. When people hear “price change” in reference to an equipment dealer, most of them will always assume that it is just a nice way of saying “price increase”. Some suppliers are going to raise their prices every few months/years, ask them what situations might lead to a price increase. Do they tie their prices to an industry index or to inflation? Remember when planning for the future, it is impossible to factor in the prices that are relevant today. You have to be able to factor in potential changes.

It is also important to ask whether you get a heads up about these changes, how long before the price increase happens do you receive a notice from the supplier? What if the costs for the supplier go down, does that benefit you financially, or do your prices remain consistent regardless of any financial windfalls for the equipment dealer?

Can you lock in prices?

It is also good to know if you can lock in costs for a specific time frame. With many different suppliers increasing their prices over time, it could be difficult to plan for your long-term financial future if you do not know how much your supplies are going to cost. Locking in a specific cost for a period of time will help eliminate that uncertainty.

What are their authorizations?

Does your potential supplier have authorized manufacturers? Have they obtained a number of different certifications? This not only means that they are “not just doing this for fun,” but it also means that they are able to provide you with technical expertise in relates to your product. If you have the choice, going with a certified supplier with authorized manufacturer relationships is often the best option.

Can you give me a liability insurance certificate?

In the event that their parts or products malfunction, you want evidence that they have adequate liability insurance to cover any damage/downtime, and you want it in writing. Even though it sounds like a hassle, make sure that the policy is being renewed by requesting another copy of the liability insurance certificate yearly.

Do they offer training?

If you are buying a $10,000 machine, you would like your staff to be able to use it properly. Does your supplier offer training for your new product? If so, is this onsite training or is the training done online? This can be a major difference depending on the type of supplies that you are buying.

How well do they know your industry?

This is an important question that purchasing managers often overlook – how well do these suppliers know your business category? Especially if you are buying products that you have very little information about, it is always good to have experienced suppliers think along with you.

What about payment options?

Payment OptionsIf you want to give yourself some financial leeway, you want to make sure that there are different payment options, other than cash, available that match your needs. Perhaps you can look into business loans or equipment leasing with or without an option to buy. This is going to depend on your business needs, but you should be able to find out if there are more favorable payment options available.

Parts and supplies

What happens when you need parts or supplies? Are these in stock? If they are not in stock, how long does it take before you get your delivery? There is nothing more frustrating than needing a replacement part right away, only to find out that it is going to take days, possibly even weeks to be delivered.

Who is my key contact and when can I meet them?

You know that while you value all of your employees, not everyone is the same. There is always a resource at your equipment dealer who might be a better fit for your particular situation than someone else. Remember that you deserve to know who your contact person is before you sign, especially considering that they will be a key to your success.

You do not have to meet your contact face-to-face, but it would be nice to talk over the phone and have a quick overview of this person’s bio. You may even want to ask for references on your contact if you believe that your project is critical and visible to your stakeholders.

Can you get me three references?

Now you do not want to start asking for references unless you are serious about doing business together. Just as you would not want to give equipment supplier information that is not relevant until you are going to move forward. If you were not ready to make a decision, most equipment dealers would probably prefer if you do not call their customers. This means that it is important that you know what you want to ask possible references.

You should also ask for a reference that decided to stop working with the supplier altogether. This strategy can give you some valuable insight that you might not get from otherwise happy customers. Perhaps they are able to tell you why they left. Perhaps they left because they went out of business, had no more need for the equipment, found the equipment dealer to be too expensive, or had some other reason not to want to business any more. This might provide you with some highly valuable insight and assist you in making the best supplier decision possible.