Toro, GE Capital create financial offering
BLOOMINGTON, Ill. – The Toro Co. has partnered with GE Capital Vendor Financial Services to provide a branded, singlesource financing solution for golf courses and municipalities.
The move not only consolidates the company’s previous financing options but it also gives Toro access to a financing arm that is larger than Textron Financial Services and John Deere Credit. Textron Financial Services and John Deere Credit have managed assets of $9.1 billion and $13 billion, respectively, and GE Capital has served assets of nearly $20 billion.
“Previously we had no formal agreement for either irrigation or turf equipment,” said John McPhee, regional business manager. “This is a next-generation product. We have put the Toro brand on it and it is all-encompassing, from irrigation to turf equipment.”
McPhee, who helped structure the GE Capital agreement, said the financing solution will help Toro compete more directly with Textron and John Deere, but pointed out that the company will concentrate on cash flow– based lending.
“As long as the customer is creditworthy and meets the qualifications, we can provide financing beyond Toro products,” he said. “Things like design fees, installation costs and pump houses can be added in.”
FINANCING A POPULAR OPTION
According to McPhee, approximately 75 percent of equipment purchased today is being financed either through a manufacturer’s financing program, a local bank, or a national provider.
“Financing is becoming a larger part of the business solution that we are trying to provide our customers,”he said. “As Wall Street money and management companies have gotten into golf over the last several years, there are more professi on al managers at courses. They understand the advantages of consolidating financing transactions into one location.”
Offering flexible financing and leasing options will be the key to Toro’s new program.
“It all depends on the individual,” said McPhee. “We will offer options such as fair market value leases, conditional sales contracts, municipal leases and different combinations. It all depends how your organization is structured and whether you are a for-profit or not-for-profit operation.
“We are not advocating one solution over another,” he continued. “That is why we chose GE Capital. They have a lot of flexibility and with their size it allows you to have a long-term relationship, which is important. When it comes to financing, you are more concerned with the second, third and fourth transaction.”
ANOTHER SALES TOOL
Just as a master lease makes it easier for customers to manage business expenses, the financing agreement also makes it easier for Toro to manage its customer base.
“Now we can look at our customers and see which ones have leases coming due and be proactive in our approach,” McPhee said. “But it is more than a tool to drive sales. It also gives us the ability to control and influence the financing services and make sure we have a quality offering.”
With the solid growth in leasing over the last five years, the secondary turf equipment market has been expanding as well. With the new financing arm in place, McPhee said Toro will be better positioned to take advantage of that expanding marketplace as well.
“When we had several partners, it was hard to manage and monitor the equipment coming back,” he said. “We will be looking at remarketing options and placing refurbished equipment back into the market with an extended warranty. That is a big opportunity because it allows us to get to a different price point and still offer a reliable product.”
Toro’s distributors will administer the financing program and they are all currently being trained by GE Capital and outside consultants. McPhee said the financing service is currently available and all distributors will be trained by May.
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