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Positioning the AMR Sell: Utilizing the Valuable Leasing Tool Randy Meinke, Vice President Kerry Linda Martin, Vendor Relationship Manager Overview When Does Leasing Fit? Recognizing Leasing Situations--”Customer Says” Leasing Benefits to the AMR Process and Vendors When and How to Utilize the Lease Tool When Does Leasing Fit? Budget and Price Obstacles Can’t Invest In Trial Program Political Obstacles Timing Cycles for Budgets and Bonds Prevent Closure Simplification Customer Says... Next Year’s Budget Next Years Revenue Bond Can’t Get Approval for a Project That Big We Have Other Capital Projects Using Up… Customer Says... Can’t Fit in Capital Budget Project Makes Sense, But… We Know What We Need, And We’re Going to RFP Sell More… Sell it Sooner Why Provide Financing? USC Three Case Studies 4 Year ROI/Payback… Immediate Cash Benefits With Lease Several Year Install Is Accelerated to 18 Months RFP - Differentiate--Introduce Something New Leasing Benefits to the Sales Process and Vendors Shorten Sales Cycle, Clinch the Deal Financing Fits Project Into Client’s Budgets Sell Monthly Payment Rather Than Gigantic Lump-sum Better Economics for Client Bundle All Costs of Project Into Financing Shorten Sales Cycle Working Through Operating Budget Operating Budgets Expenditures Authoriized through Operating Management Engineering Mid-Level Managers Day-to-day Operating Expenses Are Interchangeable With Leases Labor, Maintenance, and Supplies Sell Monthly Payment Rather Than Gigantic Lump-sum Which Is Easier to Sell $7,000,000 or $120,000? Who Can Say Yes to $120,000? Leasing Provides Better Economics for Client Improve Project ROI and Shorten Payback Projects Are Profitable During the Early Stages When Financed Monthly Income > Monthly Expense Client Obtains More “Solution” for the Same Dollar Amount Bundle All Costs of Project Into Financing Avoid Multiple Authorizations for Different Project Costs and Vendors Avoid Client Having to Expense Consulting and Implementation Stretch Lease Term to Match Benefits and Cost of AMR Benefit to Sales/Income Increase Sales Volume and Revenues Turn-key Solution Easy for Client to Say YES! Control & Shorten Sales Cycle Maintain Profit Margins May Eliminate Performance Bond, Lower Cost Case Study and Example I Client Selected Upgrade Technology From Current AMR Provider Challenge: 4 Year Payback Period Lease: Payment Less Than Annual Savings Immediate Positive Cash Flow Payback Less Than 1 Year Client Signed Deal Lease Benefits Current and Future Sales Client Can Buy Now Client Can Buy More Going Forward Your Focus Is on Customer Satisfaction More Wish List Projects Done Expand Client List… Grow Your Business Case Study and Example II Client Has Mandate to Meter by 2008 Challenge 1: Customer Budgeted for 4-year Install/Rollout Plan Challenge 2: Customer Needed Full System Immediately Challenge 3: Partial Install Produces Less Than Partial Benefits As a Result of Lack of Labor Savings Until Full Install Case Study and Example II Lease With 18 Month Rollout Provided Full Implementation and Savings Early Less Budget Dollars, More Benefit Matched Costs to Benefits Avoided Political Complications Increased Vendor Revenue Avoided Multi-source and Multi Vendor Issues Lease Benefits to Vendor Finance Dept. Improve Cash Flow With Faster Payments Avoid Credit Risk to the Vendor Offer Extended/Deferred Payment Terms Cut Collections Expenses Positive Impact on Bank Relations by Improving Vendor Financial Statement Reduce Implementation Risk Through Complete Solution When Is It Time to Introduce Financing? Often… Early Middle Late And Again… When Is It Time to Introduce Financing? Often… Early - Middle - competitive advantage, and head-off budget & price objections project ROI/payback benefits Late - And Again… remove political and project size obstacles to sell more, and to differentiate your solution Ways to Introduce Financing Discussion Proposal and RFP Service Agreement Discussion: How will you Finance… ? 3 Answers: Not Sure Cash/In the Budget Need Financing…Exploring Options How will you Finance...? Simple Questions Answer… In the Budget? How Do We Get It Through the Board? Realistic Time to Close This Prospect? How Can I Help This Manager Get This Project Done Internally? Get Ready for Finance Discussion Who Will Handle the Financing? Client’s Financial Condition Project Scope & How Lease Helps Finance Options Available Financing as a Topic Can Differentiate Between Truthful Objections and False Obstacles PROPOSAL and RFP Operating Expense May Avoid Formal RFP Incorporating Finance Option in Proposal Recognizes Client Needs and Obstacles and Differentiates Vendor Benefits of Financing Often Help Obtain Final Approval From CFO or Executive Committee Case Study and Example III Client RFP Requests Vendor to Provide Financing For Trial Program With Annual Payments in Arrears Challenge: Avoid Credit Risk For Vendor and Increase Sale Size While Meeting Customer Need Case Study and Example III Lease: Annual Payments in Advance Provided for Complete Project Rather Than Phases Customer selected full solution based on early cost savings through financing Vendor Preserved Sales Price and Margin Client Saved 10% With Alternative Payment Plan Contract Awarded to Vendor Who Used Financing and Outside the Box Thinking. Service Agreement Private-label Lease Program Presents One-source Provider Financing Matches Term of Service Agreement Unique Option, Becoming More Common With Growth of Outsourcing Kerry Martin, Utility Finance Group 800-496-4640 x677 Finance Options Available Cash from Operations Retained Earnings/Equity Bank Bonds and Sr. Notes Lease Vendor Financing Terms What Do Utilities Lease? Meters and AMR Systems Software--Billing, CRM/CIS and other Consulting and Implementation Costs Office Equipment and IT Hardware Field/Operations Equipment Land, Buildings, Facilities More… $1MM OR $100K?? DOLLARS SPENT ON $1MM AMR PROJECT 1,600,000 1,400,000 1,200,000 Expense 1,000,000 800,000 600,000 Lease Bond Cash 400,000 200,000 - Year 1 TOTAL Bottomline Financing improves the business case for your project with better ROI and cash flow. Expedite the sales process by using the budget objection to your advantage. Finance Options Help You Save Your Client Time and Money. Contact Utility Finance Group Contact: Mr. Randy Meinke, Vice President CalFirst Leasing Corporation Telephone: 800-496-4640 x 659 E-mail: [email protected] Contact: Ms. Kerry Linda Martin, Vendor Relations Manager Utility Finance Group Telephone: 800-496-4640 x 677 E-mail: [email protected] Call or Visit Us at Booth #402 For More Information
