Equipment for Services
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The document outlines Paetec's Equipment for Services (EFS) program, a profit-sharing mechanism enabling customers to acquire necessary equipment or software with minimal upfront costs while reducing network expenses. The program includes both bundled and unbundled options for financing, with various partners like CIT and AEL Financial offering support, and provides benefits such as cost savings and innovative technology to both customers and Paetec. Case studies illustrate the program's success across different sectors, highlighting significant cost reductions for clients such as hospitals and consulting firms.
Equipment for Services
- 1. Equipment for Services Program Presented by: <<Insert Your Name Here>> <<Insert Todays Date Here>>
- 2. If budget wasnt an issue, what equipment or software would you purchase?
- 3. What is EFS? PAETECs Equipment for Services (EFS) program is a profit sharing mechanism that provides our customers with a unique method for acquiring what they need for their business, with minimal or no capital outlay, while recognizing a reduction in current network cost.
- 4. Overview Over $70 million in equipment and software funded through our EFS program 70% monthly lease payments are subsidized Average amount financed per customer is $16 thousand
- 5. Options Bundled The Fair Market Value and Dollar Buyout options are available PAETEC will set up a lease with the finance partner PAETEC will perform the billing and collecting function of the lease on the customers PAETEC invoice Any credit towards the lease will be reflected on the customers PAETEC invoice Established PAETEC finance partners are the only banks that can be used and will pay the vendor directly Unbundled PAETEC will apply a monthly credit towards the customers invoice for a purchase either made with cash up-front or secured external funding PAETEC will not be involved in the lease Please Note: For the Bundled and Unbundled options, credit can be applied to already purchased equipment. Credit will vary based on the individual customer's needs.
- 6. Clear Invoicing Bundled
- 7. Clear Invoicing Unbundled
- 8. Finance Partners CIT has grown steadily to become one of the worlds largest publicly traded, diversified financing services companies (listed on the NYSE). As a leading middle market lender, CIT offers a wide variety of financing solutions from commercial financing and specialized services to consumer financing programs through intermediaries. Approximately 6,500 employees worldwide Managed assets of approximately $50 billion
- 9. Finance Partners AEL Financial is part of the Illinois-based Forsythe Group of companies. The Forsythe Group includes a diverse portfolio of companies in numerous industries, including banking, financial services, energy services, industrial power equipment, sports and entertainment, agriculture, and real estate development. AEL Financial specializes in the leasing and financing of software and high-technology products through its "Total Solution Financing" programs.
- 10. Why does PAETEC offer this program? Benefits to the Customer One-vendor solution (equipment/software, network, finance) Cost savings PAETEC subsidy eliminates budget constraints State-of-the-art technology No risk Fixed, competitive rate for life of contract Lease and subsidy on PAETEC invoice (bundled)
- 11. Why does PAETEC offer this program? Benefits to PAETEC Market Differentiator EFS helps set PAETEC apart from competitors Customer Retention The program is designed to allow PAETEC to commit to additional equipment / software and extend the term of the customers contract Longer Contract Term With an extended contract term, the lease payment decreases. It also allows PAETEC to share more of its profit in the form of a credit towards the customers monthly lease payment
- 12. Program Structure Customer Signs Service Agreement with PAETEC with Minimum Monthly Fee Master Service Agreement PAETEC Pays the Monthly Lease Payment to Leasing Company and Acts as a Billing and Collecting Agent Pays Vendor Upon Receipt of Delivery and Acceptance Form Customer Signs Lease with CIT/AEL Customer Signs Vendor Purchase Agreement Customer Vendor PAETEC CIT / AEL Leasing Company
- 13. EFS Customer: Success Story
- 14. Customer Case Study: Hospital Equipment Information Outdated PBX Vendor is NEC planned to continue working with them System upgrade is $250,000 and NEC requires progress payment Customer Situation Cash flow bind Own current system
- 15. Customer Case Study: Hospital Equipment Lease Solution Fair Market Value this option meets the hospitals need for future upgrades due to its growth. 60-month term to lower monthly cost Fair Market Value option keeps the payments lower per month Total lease payment = $5,625
- 16. Customer Case Study: Hospital (7) PRI T-1 (8) PRI T-1/ T-1 EUCL 26,838 minutes/month Domestic Intralata 18,918 minutes/month Domestic Intrastate 28,358 minutes/month Domestic Interstate 500 minutes O+ calls per month 3,750 O+ minutes per month Local LMS 1,038,643 by minutes Zone 1 Local terminating access $2,077.29 (6) T-1 Local Loop Operator Service commission to customer 27% $675
- 17. Customer Case Study: Hospital Why did this healthcare provider select PAETEC? PAETEC reduces cost for outbound traffic by 26% PAETEC reduces cost for Local, Intralata, Intrastate, and Interstate usage by 25% PAETEC provides a subsidy of $337,500 With NEC progress payments, you have to have at least $100,000 in equipment
- 18. Additional EFS Success Stories Construction Company Total EFS Subsidy = $5,392 Contract Term = 36 Months Monthly EFS = $150 Monthly Usage = $930 Management Consulting Firm Total EFS Subsidy = $50,498 Contract Term = 36 Months Monthly EFS = $1,402.72 Monthly Usage = $3,873 Travel Agency Total EFS Subsidy = $14,153 Contract Term = 60 Months Monthly EFS = $236 Monthly Usage = $971
- 19. Thank You