Buying a Printer: Financial Incentives

If you’ve been pondering an expansion of print capabilities or upgrade to your equipment, it may be time to make your move.

Across the board, makers and marketers of large-format digital print systems are offering a variety of incentives to help you add one of their printers. Instant rebates, lucrative trade-ins, and bundles on everything from software to training – it’s the expected mix of enticements to make digital print technology more attractive to discerning buyers.

Yes, many of these types of deals have existed in the recent past. What’s different this year, however, is the availability of credit to allow more print service providers to take advantage of such deals. With the worst of the recession behind us, vendors, their finance departments, and lending partners are all eager to do their part to get the economy rolling with loans or leases for qualified buyers.

An improved finance picture
“We’re not all the way back, but 90 percent of the customers I send for financing today are getting approved,” says Dave Cich, partner in CET Color. “Five years ago, the only people who would even be considered for financing were those with great cash flow and perfect credit, and even then they might not get it,” he recalls.

Mutoh marketing manager David Conrad agrees: “The economy is bouncing back nicely from the recession of a few years ago. Banks and lending institutions are coming up with some very creative programs to help small businesses purchase the capital equipment they need to run and grow their business.” His own company’s finance wing, Mutoh Financial Services, has been qualifying customers with “creative programs to maximize their dollars and achieve their purchase goals.”

Lou Piermarini of Mutoh Financial Services says the financing picture is dramatically improved from 2010. Credit terms are better, and qualified buyers can forego the down payment. “Small business FICO score requirements have also come down,” he reports. “In 2010, the FICO score minimum requirement was 700 – in 2012 it was only 650. “The financial world has settled back to its old rhythm with lending becoming as active as it was prior to the financial meltdown,” says Piermarini.

At Polytype America, the American marketing wing for WiFag-Polytype UV printers, sales director Jim Cain notes, “Money has become somewhat easier to get, and leasing has gotten easier since the credit crunch of a few years ago.”

But Cain notes, however, that availability of financing doesn’t necessarily guarantee easy approval for all who apply. “Most new opportunities are subject to much further scrutiny by the banks and leasing institutions than in the past,” he adds. “Qualification is based on financial health, a strong business plan, and past history.”

“Small businesses still need to demonstrate good payment character, especially on fixed-term debt,” says Piermarini. “Credit-card percentage availability needs to be 40 percent or better; previous years would require 60 percent or better. The guidelines are more defined now, with certain markers still preventing approvals, such as bankruptcies, charge-offs, tax liens, etc.”

Whatever the financial arrangements, buyer beware, cautions Terry Mitchell, vice president for marketing at Fujifilm Graphic Systems Division: “If delayed payments or reduced payments are offered, be sure to know what the financing rates and terms will be both during and after this initial period. You should also know if there are any pre-payment penalties, especially if credit markets improve and you want to refinance the equipment.”

A range of deals and promotions
Those who qualify for financing, or with the cash to invest, might qualify for some additional purchase incentives. Along with loans and leases, vendors are doing whatever they can to make their systems even more attractive to purchasers. There are no set rules, no promotion standards – buyers must evaluate printers and programs case by case to decide on the most attractive package to help grow their businesses.

At Epson, Richard Day, group product manager for the Professional Imaging division, notes, “We are constantly reviewing ways we can ensure our customers get the best value for Epson equipment, and our programs are being regularly updated.” Current promotions are featured on the “Promotions” section of the company’s Professional Imaging division website. For instance, through the end of February, Epson offered rebates on its entire line of professional graphics systems.

At Fujifilm’s Graphics Systems Division, Mitchell says the goal is to adapt its varied programs to customers, based on need. “We work directly with customers on an individual basis to qualify them for the best rate and optimal terms, based on their individual situation,” he says. “We have more financing alternatives today than we did a few years back, and can provide more options as a result.” Those options might include financing, special bundles of consumables with the printer, as well as generous trade-in allowances. “Depending on their situation, Fujifilm offers low or no down payment options, special rates, payment holidays, and delayed payment terms,” he says.

“Some customers are reluctant to invest in new equipment without the assurance of having a contract already in hand,” Mitchell continues. “Our take is that delaying or reducing payments for the first six months help provide an incentive to invest now rather than wait. This puts the print provider in the position to gain new business knowing he can handle the volume.”

Another option that can make the purchase more attractive is to bundle the cost of the system with ink and media so buyers “can best leverage their purchase dollars,” Mitchell explains. “Several presses are bundled with software or extended service contracts or ink and/or media as a package that offers price discounts compared to purchasing separately,” he explains. “The package is essentially tailor-made to each particular customer’s needs.”

For those looking to upgrade or expand print capabilities, trade-in allowances can further reduce the price of new technology. “In some cases, we offer trade-in programs on older equipment that still has service life, reducing the capital-cost outlay required to upgrade to a newer, faster press.” Mitchell says. Trade-in allowance is based on the type of press, its age and condition, and current demand for used equipment.

Mutoh has extended its own trade-in program through the end of the first quarter, in response to demand for this option, according to Conrad. “Giving customers the ability to upgrade or replace equipment that is no longer keeping up with their production or performing to their expectations has been very well received by the marketplace,” he notes.

The Mutoh program gives the customer the option of trading in any brand of wide-format printer for one of the company’s new ValueJet systems. Trade-in allowance varies from $3245 to $10,000 toward purchase of certain printers, and customers without a system to trade can qualify for rebates that range from $1000 to $2000.

“Take advantage of programs that provide the best price and the best terms for the equipment you need,” Conrad urges. “There are finance options available to qualified persons that don’t require payments for one to three months, giving you the ability to start making money before you have to spend any.”

Matan Digital Printers recently added a new financing program for its DTS (Digital Traffic Sign) printers through ASHRA, an Israeli government agency. Erez Zimerman, Matan’s vice president of marketing, says purchasers of the company’s UVIStar grand-format printers, marketed by Fujifilm in the US, also enjoy an easy upgrade path to add new features.

“We offer our existing customers the ability to upgrade their Matan UV printers to include the latest new capabilities,” says Zimerman. “Our customers always enjoy the benefits of keeping their system up to date with regular upgrades.

“When investing in capital equipment, owners are entering into a long-term relationship with their vendor,” advises Zimerman. “Matan offers our users regular upgrades to their current systems, aligning them with the latest version of our product, if the hardware allows.”

For those considering CETColor’s Xpress 500 or 500-Q flatbed presses, leasing options are available for those who qualify. Options include no payments for the first 90 or 100 days “so buyers can build up the business before they need to make payments,” according to Cich.

He says the company’s strategy is to offer a basic system, affordably priced, which can be expanded over time. “We allow you to choose a model, then select the options that best fit what your company does,” he explains. “As your business changes, we are still there, allowing you to upgrade or change your printer,” in response to production demands.

For instance, he says a shop could start with a basic 4 x 8 flatbed with grayscale or CMYK printheads, and later add white-ink capability, a varnish head, or a second row of printheads to double production speed.

“It’s a way someone who is only approved for $75,000 in financing right now can get started,” he notes. Owners of the company’s older systems have the option of trading up to the latest technology at a cost ranging from $40 to $80,000. Final cost depends on a variety of factors, according to Cich: how their printer was originally configured; how long it’s been used; and how much is owed on the system.

Polytype America offers a range of promotion, including “straight purchase opportunities, in-house lease financing, and equipment rental,” according to Cain. “All are based on the purchaser’s requirements at time of order,” he explains. “Leasing can be (structured) for a $1 buyout end balloon payment with smaller initial payments per month, or other options that are mutually agreed upon.” Throughout the year, the company may offer additional special promotions and incentives on its print systems or consumables, timed to the major trade gatherings, he says.

Gandy Digital works with several outside finance and leasing companies to make it easier for buyers to acquire or upgrade to its technology. “We also offer to trade in your existing printers against (the cost of) additional equipment,” reports David Jones, marketing director. “We offer incentives on different used printers available from the Gandy Digital printer market (page xx) on our website.” That site was created to help Gandy customers sell older equipment, or apply the value of their older system as a deposit toward the grand format GD Pred8tor system.

Hewlett-Packard customers “have access to a number of flexible financial solutions that help provide the tools they need to modernize their graphic equipment immediately without large, upfront expenditures,” according to Lee Eberding, marketing director HP Financial Services, Americas.

He points to t the company’s “Better than Zero” and “1-2-3 Deferral” programs as examples how HP works with qualifying US and Canadian customers to help them acquire the equipment they need. The deferral program, for qualifying equipment and transactions over $250,000, adjusts payments over a three-year lease with purchase option to make costs more manageable.

“For the first three months payments will only amount to one percent of original equipment costs and step to two percent for months four to six , and three percent for months seven-through-36,” Provost explains. “This can help customers effectively manage and grow their businesses over time.”

The “Better than Zero” program provides an opportunity to finance equipment “at a less than zero implicit lease rate on qualifying technology and transactions between $50,000 and $250,000,” he adds.

Build for tomorrow with your best deal
Whether you’re buying new or used, financing and promotions are tools to help equip any shop to keep pace with a client’s evolving needs. “The key is to look for equipment that will take them to the future by at least five years, and look beyond their needs today,” says Mutoh’s Conrad. “You need to be able to quantify how much more new business you can generate with the new technology at hand.”

In that sense, for all the special offers and creative financing vendors offer, the best incentive for investing in a new print system is the opportunity to build on your business.

Don’t assume what seems an irresistible bargain is the best strategic move, however. “Do your due diligence, invest for now but also for your future goals,” counsels Cain at Polytype. “Look at your business finances. Buy what you can actually afford for your business at the time of purchase, figuring your 18- to 24-month growth goals.”

Evaluate options in terms of the total cost of ownership (TCO): system costs, operating costs, labor and consumables, as well as your expected selling costs.

At Matan, Zimerman suggests potential buyers consider where your specific market is heading and which applications you’re best positioned to provide. Then, consider such factors as “productivity, usability, cost of ownership and operation, and the printer price.”

In the end, deciding if a good deal is the right deal should be a response to the unique profile of a business and its goals, says Conrad. He cites a range of factors which ultimately determine ROI from a new digital print system: number of employees; the need for training, or adding staff; current customer base and needs; ability to attract new business; marketing and advertising expenses to promote new services; and any requirements to upgrade facilities.

The key is “identifying the market opportunity and understanding the potential value in terms of added revenue and margin as an overall part of the existing business,” he says. “Sometimes added value comes in the form of expanded capability or increased reach to existing markets. (In) either case, the reward always has to be greater than the risk in order to make it a viable decision.”
 

8 Leasing Tips

Considering leasing equipment, but not sure if it’s right for your shop’s particular needs? We went to Stephanie Canales, director of Financial Services for Panoply Finance, to see if she had any suggestions for print providers and how leasing might help their bottom lines. Based in Louisville, Colorado, Panoply (panoplyfinance.com) specializes in funding options and customized lease structures for wide- and grand-format printing equipment. Canales offered the following tips for shops that are evaluating leasing programs, and how leasing can prove to be beneficial:

• Take advantage of the increased Section 179 Tax Deduction for 2013 and write off up to $500,000 worth of equipment this year. The increase this year provides substanial tax breaks for capital-equipment purchases. “The break you receive could be worth a full year of lease payments,” says Canales.

• Consider leasing equipment to keep your lines of credit open with your bank for operations and short-term financing needs.

• Preserve your company’s cash flow with affordable monthly payments – versus a large outlay of capital if you were to buy the equipment outright.

• “Don’t be intimidated by the lease process; it’s usually quite simple. An easy, one-page application, a few questions about your business, and a quick 24- to 48-hour turnaround time is usually all that’s required to get an approval.” Most leasing and finance companies aim for fast turnaround, she indicates.

• Be sure to structure your lease so you can return your equipment at the end of the term – “this helps you to avoid obsolescence and stay on the cutting edge of the technology curve.”

• Ask about financing 100 percent of your new- or used-equipment package. “There is usually room for soft goods such as software, consumables, installation, and training.”

• Talk to your accountant to see what is the best solution for you and your operation. “Generally, creative payment ideas as well as various end-of-term buyout options can be tailored to meet your company’s financial needs.”

• Finally, says Canales, “Find someone you trust. It’s your business and your livelihood.”