Sales Finance A Tool for more Profitable Sales. Jim Howard Kevin Nies

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1 Sales Finance A Tool for more Profitable Sales Jim Howard Kevin Nies

2 John Deere Financial Kevin Nies Inside Sales Representative Madison, WI Jim Howard Inside Sales Representative Johnston, IA

3 You Will Learn Who Is John Deere Financial Why Sales Finance is Growing In Usage What Sales Finance is and How to Use It When To Offer a Sales Finance Incentive How to Build Sales Finance Programs, How to Submit Transactions & Reports

4 History of Multi-use Account The multi-use account was originally established in 1974 as Farm Plan. The Wisconsin Equipment Dealers Association cooperative effort to eliminate the expense, hassle and risk of in-house receivables. Purchased by John Deere Financial in the mid 1980s, Farm Plan has been a part of the John Deere for more than 25 years. On June 1 st, 2011 we were proud to announce that Farm Plan will now carry the John Deere Financial name.

5 Types of short-term farm debt Financial solutions that meet your needs 30-day accounts Seasonal Operating loan

6 Accounts receivable management Traditional Accounts Receivable Each sale is funded days later Involves follow-up and collection time Open accounts are subject to risk of bad debt Requires capital funding to maintain Encompasses a wide variety of costs A/R is not a high returning asset John Deere Financial Solution Provides two-day funding for approved multi-use account sales Eliminates collections and conflicts of interest Insulates merchant from risk of bad debt Increases working capital and cash flow Reduces cost and expenses Frees up time to focus on profitable opportunities

7 John Deere Financial Overview Multi-use account Regular Credit Limit (30-Day Credit Terms) Special Terms Credit Limit (Deferred Credit Terms) Multi-use account is a revolving charge account Special Terms Limits are utilized for Input Financing

8 81% of farmers say they use input financing. Survey Question: What percentage of your input purchases do you finance through suppliers programs? (Instead of paying cash or using an operating loan)

9 53% of all farmers say special financing on products will persuade them to buy more of those products. Survey Question: Does a special financing offer on the products you buy, drive you to buy more of those products?

10 John Deere Financial Customer Trends Key customer findings: 75% of sales finance users prefer it for the cash flow and convenience Over 50% of producers say a finance option will influence the timing and the type of products they may purchase 68% of expanders plan to use sales finance

11 John Deere Financial Merchant Trends Seed Company results: 22% increase in seed units sold when using sales finance versus cash 15% increase in new customers when offering financing with the promotion Finance customers purchased higher technology / more profitable products (Upsell)

12 22% of responders plan to use more input financing in the future % 42.15% 18.39% 17.94% Survey Question: How would you expect to use agricultural input financing five years from now?

13 Independent Regional Seed Companies What About Regional Seed Companies? Sales Finance Volume Increased: 24% What Will Happen This Season?

14 The Value of Sales Finance Sales finance is a marketing program with a finance incentive It assists your sales efforts by helping you: Up sell Differentiate your offerings Sales finance works best when it s positioned and offered during the front of the sales process as it drives the purchase behavior of growers Close the sale by addressing cash flow with seasonal terms Strengthen customer relationships and build loyalty Customers are looking for companies where they can purchase and finance their purchase

15 Why John Deere Financial Sales Finance Programs? Grower Benefits Attractive interest rates - Fixed Zero - Below Prime Crop terms Cash flow flexibility Unsecured debt Expanded borrowing base Allow pre-pay positions to work longer Seed Company Benefits No cost programs Capture more acres with early commitments Increased product sales - Purchase more product - Purchase increased margin products Enhanced grower retention Expanded cash position with two day funding Elimination of recourse and collections

16 When To Offer Sales Finance Fall Spring Pull Sales Forward Gain Commitment Lock in Acres Lock out Competitors Improve Customer Loyalty Get Paid Early Better Sales Projections Shift Burden of Risk Let Salesmen Sell Customers Pick up Acres Replant Seed In-Season Sales Incent Sales of Specific Varieties Keep up with Shifting Planting Intentions Clean Up Sales

17 John Deere Financial Overview Multi-use account Regular Credit Limit (30-Day Credit Terms) Special Terms Credit Limit (Deferred Credit Terms) Multi-use account is a revolving charge account Special Terms Limits are utilized for Input Financing

18 John Deere Financial Multi-Use Account (1 Ag Preferred Account - Two Credit Lines) Regular Line Revolving Credit Limit Revolving Terms Pay in full, no interest or revolve Day to Day Purchases Parts/Service Fuel Feed Farm & Ranch goods Any ag merchant accepting JDF Unsecured Special Terms Line Seasonal Credit Line No monthly minimum Balance due in full on due date Crop Inputs Only Seed Chemical Fertilizer Custom Application Crop Input Merchants Offer Unsecured

19 John Deere Financial Multi-Use Account (1 Ag Preferred Account - Two Credit Lines) Regular Line Customer rate = prime % plus an additive No interest if paid in full Merchant pays a Discount fee Behaves like other Revolving Credit Products Submit transactions at point of sale On Line Transaction Center (OTC) Terminal Compatible Software Funding in 2 business days Special Terms Line Customer rate determined by Sales Finance Program Sponsor Sponsor is buying the rate down Lower rate to grower means more cost to sponsor Interest begins at transaction time Sponsor pays Discount fee Behaves like unsecured, short term installment note Submit transactions at point of sale On Line Transaction Center (OTC) Funding in 2 business days

20 1. Log-in to the Merchant Toolkit 2. In the Special Programs section, select the Select my programs link 1 LOG_IN LOG_IN Welcome, Merchant 2 Select my programs Select my programs

21 Select My Programs Options 3. You may have up to three options to use depending on your Merchant Agreement and location. 3 ADMIN OTC LOCAL MERCHANT for major ag inputs Select my programs

22 ADMIN OTC Qualifying product categories include (major ag inputs): Seed, Fuel, Fertilizer, Crop Protectants generally applied to Special Terms line of credit

23 ADMIN OTC December-2013 Prime + 4% A.P.R

24 Additional Training Computer Based Trainings Online in Merchant Tool Kit Help Your Agribusiness Customer Manage Their Multi-use Credit Limit Answering Common Questions About the Billing Statement Create or Select Your Own Agribusiness Finance Program Navigating the Merchant Service Toolkit

25 Sales Resources Sales Resources Kevin Nies (Inside Sales) Jim Howard (Inside Sales)

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