The topic of rising interest rates is showing no signs of quietening down. Chances are that your commercial-solar customers may be anxious about rising interest rates and will bring it up in conversations.
Helping them to understand what’s happening, why and how it will affect them may mean the difference between closing a sale and having it fall flat.
Here’s what you need to know.
1. Understand the basics
No one is happy about it, but bear in mind that this rise is coming off the back of record low interest rates and many interest-rate cuts.
Interest rates need to adjust to control some of the highest inflation seen in many years around the world.
While there are lots of things that have contributed to the timing of this rise, two of the obvious causes are a large rise in the cost of fuel and the global energy shortage (particularly fossil-fuel energy).
2. Remind them about “cash-flow positive” benefits
In the vast majority of cases, projects will remain cash-flow positive – even under the revised rates (especially when factoring in forecast energy price rises).
Cash flow plays a huge role in the survival of a business. One of the benefits of using a payment plan is that businesses avoid tying up capital while still taking advantage of reduced energy bills.
So while monthly payments may increase slightly, the benefits of payment plans remain.
3. Show them the actual numbers
Take a minute to do the sums for your customers to work out how much a repayment might increase. This will help them see that the dollar impact of an interest rate rise may be quite minimal.
For example, a 0.5% rate increase to the monthly repayments on a £30,000 payment plan would result in a monthly payment increase of around £8 (over both 5- and 7-year terms). While no one likes a price increase, the cost of a few coffees a month is a lot lower than they might expect.
The bottom line
While there’s a window for action on credit approvals, rates are rising so fast right now that they’re being reset as often as every 30 days. Educating the market about this is the reality for our industry – as it is for all industries that use commercial finance.
For help with larger or complex projects, or for tips on conversations with your customers, please call your Account Manager. The Smart Ease team is always here to help.