As a follow-up to last months leasing article, I sat down with leasing guru Pat Kistler of Amerisource Funding to pick his brain on his 20 years leasing experience and to find out how Amerisource Funding can help medical software resellers.

KB: Pat, in the 3 years that I've known you, I've appreciated your honesty and your candor -- thanks for spending some time answering a few questions.

PK: Thank you Kevin. I’m hopeful that after reading last month’s article about leasing, your Reseller Network will realize the importance of creating a successful leasing program. Equally important, and as I stressed in the article, it’s critical to develop a leasing company relationship, because it is the reseller’s client. The reseller must insure that their client is being treated fairly and with respect.

KB: I’ve known you for several years, but tell our resellers a little about yourself.

PK: In 1984 when I started in the leasing business, I had no clue what a lease, loan of line of credit was. I was fortunate to have joined my dad’s company as his first employee. He gave me the chance to learn this business. We were fortunate – our timing was good – and we represented a few different computer companies who sold what was essentially a glorified typewriter at $7,500.00 each to automobile dealerships. The software helped manage their car sales contracts. Over the course of years, we ended up financing over 3,000 of those systems. Now, that same computer system is an entire network which can carry a quarter million dollar price tag! How did that happen?

KB: Where did your career path take you from there?

PK: I became President of our company in 1993. We then grew to become the largest independently owned leasing company in the State of Texas. In 1997 a public leasing company who did roll-ups offered us a few bucks to sell – which we did – that was a good day – and I entered corporate America life.

I was their V.P. of Marketing which was a nice title and I learned a lot. My job was to train their 120 person sales force how to cater to an equipment suppliers needs (as opposed to just “doing deals”). I think back and realize it was like training the animals at the zoo to become a marching band!

Then, American Express bought that company and I jumped back into sales. I learned that the problem with a billion dollar firm is the list of things you can’t do seems to outweigh the list of things you can do. And the paperwork never ends. Once I heard they were being sold to G.E. I realized it was time to get back to my roots, so I now am in charge of the Leasing Division for Amerisource Funding.

KB: What do you see in the leasing industry that’s new and an important topic for you to discuss with resellers?

PK: Automatic Credit Scoring – each person has an individual credit bureau score which group us into “excellent credit, moderate credits and high risk credits." Consequently, now the funding sources can make a credit decision in less than 1 minute. That’s OK for the majority of business customers. However, the problem is there’s no time left to tell any stories about the customer who was turned down and what circumstances may impact why this is actually a good credit risk. That’s where a good leasing rep’ can really earn the Resellers business.

Ability to Market in their own business name – most resellers I talk to would like to simply offer the customer a choice – cash or finance? – if they select financing, wouldn’t it be nice to hand them an application form in their own company name. That’s the way I like to create finance programs for resellers, allowing them to increase their brand name awareness and make selections on how they want to set-up the financing program. And all without any cost or risk.

Higher Credit Approval Ratio - most lenders have just one set of credit guidelines. When I was considering my next move in the leasing industry, I decided to be an independent company so that I could represent the best of what several different lenders offer. It’s kind of like being an independent insurance agent. I can get the vast majority of leases credit approved for any reseller because of this flexibility – start-ups and “tough to do” credits included.

KB:  Keep going, you're on a roll.  What else should resellers know about?

PK:  50% Prefunding – I like the idea of 50% prefunding because the leasing marketplace is very competitive, with more money out there to lend than there are good deals to underwrite, so the leasing companies are catering to Resellers who can bring them a nice, consistent volume of business. I like the idea of prefunding because it allows the reseller to take advantage of their supplier discounts and creates an incentive to complete the job quickly so that they can then realize their profit margins quickly.

Accounts Receivable Factoring – This could be a great, economical, instant money source.  Cash flow is critical to any business and just because an account is billed doesn’t mean that the cash has been received. One reason I joined Amerisource Funding is because of their expertise with accounts receivable factoring. This could be a great, economical instant money source for larger resellers. I know that if the reseller maintains a commercial accounts receivable monthly billing of $25,000.00 or more per month, then they are a great candidate to take advantage of factoring their receivables. I used to think that was too expensive, but now realize most businesses already give a 2% cash discount for net 10 day terms, which is actually a form of factoring. The problem is that the clients still take 30 days to pay and take the 2% discount. Plus, many resellers would be much more efficient if they could take the A/R processing and give this workload to an expert. System sales and medical billing sales both apply so this could be another great reason for resellers to form a partnership with Amerisource Funding.

“Bundling” your system sales solutions – too many resellers think leasing doesn’t apply, or it’s a hassle, or all of their customers “just pay cash”. I’m not here to convert all of the non-believers, but leasing has grown to incorporate all of the soft costs involved with a system sale, including training, and it just makes sense for a client to consolidate all of the soft costs into one affordable monthly lease payment.

KB: So how would a reseller use leasing in the sales process?

PK: Think about it this way – skimping because the cash price is so high.  Would a business pay an employee 2 or 3 years in advance for the services they are going to perform for the business? Of course not. A business pays the employee monthly, as the service is being performed. This just makes sense. Well, in my mind, purchasing a practice management software system is just like hiring a new employee. If more resellers sold the overall system costs this way – via an affordable and justified monthly payment expense – then more customers would buy the system they really need instead of skimping because the price is so high. Plus, 9 times out of 10 the Reseller gets paid faster by a lease, so why not?

KB:  Outstanding Pat.  Thanks for spending a little time with me today.  I think that the ideas you've shared will be appreciated by everyone who gets the newsletter.

-- Kevin Burdick,               
InvestMedLLC.com        

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