If I had a Million Digital Signage Dollars

01/28/2005

We all know the song "If I had a million dollars I would buy your love" or in our case, your Digital Signage Project. Many projects would probably roll out faster if we had a clear definition on the money aspects of the business. There are many financial terms in the industry that often cause confusion for people new and old trying to break into the Signage Industry.  Most of us have been in the A/V industry and not in the banking industry so it is  very understandable that there is a lack of project funding information.

Many of us were taught from the old days that the real projects will pay cash, but the theory to concept trickles down (or up) to us as real project opportunities start to form. Talented large businesses and start up companies sometimes need terms. Often, it is not the the desired outcome of a project when you find out your customer needs terms, which means you need funding to help roll the project out. Often times in the beginning scenario of quotes and excitement we often sometimes forget or are afraid to ask "how is this project being funded"?

We need to overcome this fear and come to the conclusion that if we are really serious about our business and really want to make it in the Digital Signage World we need to ask on the very first point of contact. Overcoming this fear will help ourselves to help our customers prepare and plan for what information we need from them to work together from project start to successful completion. Nothing is worse than working a project for months and then finding out the customer needs terms. This is a common scenario and happens to the best of us.

Some of the options available for the Digital Signage industry are account net terms, joint purchase orders, leasing services, flooring and SMB.

But what does it all mean?

Net Terms usually applies when your account is established with a distributor and has a credit limit plus payment terms based on your application. The net amount of each transaction is due within 20-30 days depending on the distributor. One of the problems with net terms is that if you are netting out with your distributor on the net30 and your customer is doing the same with you, sometimes you customer will pay and postmark a check on the very last day your payment is due. So if you can set a precedence of net 25 with all commercial customers this will make your accounting life easier.

Joint purchase orders applies when a supplier is willing to consider a Joint Purchase Order from you and your customer. Generally this is used when a reseller wins a large bid that his/her own credit line cannot accommodate. A Joint Purchase Order is typically used with, but not exclusive to, federal, state and local government agencies, including schools. If they are unfamiliar with your end-user, they must first be able to approve them for the amount of credit required. If the project is high profile and they are familiar with your end-user this is even better.  The Joint PO can be very successful for start-up Digital Signage companies and should be taken into serious consideration when a large project comes your way.

Flooring are term payments that may allow you to finance  store inventory through a finance company. Some flooring companies are:  GE Commercial Distribution Finance, IBM Credit, and Textron. Flooring is often used in conjunction with distributors and manufactures and other large suppliers but sometimes can be used for large retail outlets.

SMB Technology Reseller Finance is a program that offers smaller resellers of Digital Signage products a quick turn around for shipments. Some can offer:

• Credit approvals from $50,000 to $250,000
• Credit turnaround in one business day
• 45-day payment terms to resellers

With a program like this the reseller can increase purchasing power and working capital while adding no additional expenses. This also allows  the reseller to add value added products easier such as warranties without the fear of going over a typical credit limit. More sale equals more margin! See more about the SURF program here:

http://www.gecdf.com/product/surf.html

Leasing has become one of the most popular solutions to financing in the Digital Signage business. This approach can help avoid delays in the customers decision process because they can make payments which in turn takes away the focus on pricing and makes it a payment option for them. This also provides your customer a tax deduction and no down payment.  With leasing it is also easier to sell upgrade configurations, warranties and cables. See more about leasing at:

http://www.ge.com/en/financial/business.htm

Distribution can be a good source for assistance. Make sure you ask your distributor about the specifics of terms on your account or if there are any other in-house programs available. You can also find out what leasing companies they are using successfully for other clients in your business.

These are just a few of the programs out there that are available. Explore your funding now and do your research -- be financially prepared for every kind of Signage opportunity that may come your way.

Good luck and Virtual Success!