Innovative Financing & Effects on Sales

While global and regional economic performance, the potential for terrorist attacks, and the uncertainty of fuel supplies all affect the demand for medium-duty and heavy-duty trucks, another important effect on the demand for these trucks is the ability of potential buyers to obtain timely financing that meets their specific needs and which is available at affordable costs. A variety of customer financing programs exist for application in the medium-duty and heavy-duty truck market. Not all manufacturers and distributors of these trucks offer such financing programs, however, and comparable programs offered by many financial service companies frequently do not meet the specific needs of the buyers of these trucks or the qualifying requirements for such programs make them inaccessible to many potential buyers.

Creative financial programs and innovations in financing for medium-duty and heavy-duty trucks have the potential to stimulate sales in the industry. A research study is proposed to investigate the effects of creative financing and innovations

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ated with a secured loan as opposed to an unsecured loan. Another advantage for a firm in pledging its accounts receivable is that the firm's customers nominally continue to deal directly with the firm, although the mailing address for payment on their accounts may actually be that the bank or other financial institution extending the secured loan (Ross, Westerfield, & Jaffe, 2002). Obtaining a secured loan also may impose restrictions on the borrower with respect to the raising of additional capital. As an example, an asset securitization agreement may prohibit the borrower from issuing other debt instruments, obtaining unsecured loans, or floating new stock issues (Ross, Westerfield, & Jaffe, 2002). Trade credit is extended to a business firm by such a firm's material suppliers. A typical trade credit arrangement is two-percent 10 days · net 30 days. In theory, firms to which trade credit is extended are expected to pay for goods with 10 days of receipt in order to obtain the two-percent discount. Considered within this context, the cost to a firm of waiting to full 30 days to remit payment is two-percent of the value of the shipment. On an annualized basis, thus, trade credit costs a firm 36.73 percent per-annum if the
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Approximate Word count = 8594
Approximate Pages = 34 (250 words per page)

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