Know Your Rep First And Your Lender Second

May 22, 2018

Websites, social media, emails, drip marketing, advertisements, the list is long and it is all centered around one thing, the company. While the company, in this case the lender, is inarguably important, and all of those aforementioned mediums are designed to show you each company's capabilities and culture, not the rep. You would think it would be the other way around. You work hand in hand with your financing rep, day in and day out in order to either obtain or provide financing. The sales rep knows, or should know, every detail for your deals and understands better than anyone how to work with your organization. Yes the lender is important, I cannot stress enough that this is simply an additional step that should be included in your decision making process when choosing a financing rep.

 

The primary reason for knowing your financing rep is of course fraud. Most of the fraud at financial institutions is committed at the rep level. Upper management places hard to reach quotas and puts pressure on middle management to make sure their divisions perform, this in turn causes middle management to put slightly more pressure on team leads which in turn place that pressure on the rep. Depending on the company, the blind eye can start as high as the board of directors or upper management, most of the time however fraud is committed somewhere between middle management and the rep with the management level above them turning a blind eye. They have little incentive to blow the whistle when their very livelihood, and that of their families, rests on making quota, any way they can. 

 

Most people are not aware that commercial equipment financing is still largely unregulated, leading to a "buyer beware" transaction in which customers are regularly taken advantage of unbeknownst to them until they are audited and find out the hard way, with penalties. Having a rep that you know is competent and transparent will protect you from the myriad of bait and switch tactics that are used every single day in the financing industry. It is a simple process to go over the documents, structure of the transaction, rate (mostly unimportant), and cost of funds (mostly important), and your rep should be explaining these things in simple, easy to understand terms, Einstein said "If you cannot explain it simply, you don't understand it well enough." and this cannot be more true than with this process. Don't fall prey to the smoke and mirrors of overcomplicated explanations, they are usually hiding something.

 

Another thing to look for in your rep is their proactive approach to protecting your business. Do they ask about your goals as an organization? Do they tell you in advance what your termination clause is? These can be up to 6 months or longer. Do they let you know what your interim rent charges are going to be? While interim rent is an understandable and necessary part of most transactions, many times customers don't even find out what interim rent is until they are sent an invoice. Finding a finance rep that you know is going to act as a shield between you and any predatory lending should be the first step in choosing who to work with.

 

With today's global marketplace becoming ever more fast paced it is remarkably easy to look over simple details that hit us deep in the pocketbook. I know I have experienced it more than once myself and it is nothing if not frustrating. In the end Stephen M.R. Covey summed it up pretty well in his book, "The SPEED of Trust: The One Thing that Changes Everything" when he said, “There are no moral shortcuts in the game of business—or life. There are, basically, three kinds of people: the unsuccessful, the temporarily successful, and those who become and remain successful. The difference is character.” I have learned it is absolutely integral in my life, and my work, to carefully choose character.

 

 

 

 

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