North American Cable opens financing arm

Thursday, January 4, 2007

WEST CHESTER, Pa.--North American Cable Equipment, a manufacturer and distributor relatively new to the security industry, announced this week the creation of NACE Finance, a financial services company designed to serve the working capital needs of small- and medium-sized dealers and distributors. Though NACE won't be funding loans itself, it will be acting as an underwriter, approving the loans and matching customers with appropriate funders.
"Let's say [a distributor] has a swell in business," posited Aaron Starr, president of NACE Finance, "they're working capital gets tied up" as they wait for invoices to get paid. "We can buy the invoices at a discount so they get immediate cash, or we can get them a loan using their invoices and inventory as collateral."
As for dealers, Starr said NACE could facilitate Small Business Administration loans, or help dealers develop leasing programs. He said the latter is where NACE can be of most help, as dealers can turn small jobs into bigger ones. If a customer feels a full security system is too large for the budget allotted, Starr said, "rather than the customer looking at their bank account, they can look to lease the equipment." Similarly, rather than cut a quote to be price competitive, dealers can offer the leasing option, "then you're focusing on the payment instead of the quote," Starr said. "You're able to give the person the mental satisfaction that there's less out of pocket right away without having to touch the quote and the profit that you're going to make."
Starr said this is the sort of thing for which NACE has been passing on leads to finance companies, and now "we're able to be in the process from the beginning, making sure the funders have the confidence and have us to lean on in case there's a default; we can do the resell instead selling assets for pennies on the dollar at auction."
NACE has been largely selling to satellite resellers, but has been over the last 18 months been marketing and selling to the security channel, as well as encouraging satellite dealers to use their expertise to get into residential CCTV and audio work, said Starr. "Now they're starting to get into the commercial market and custom installation," he said.