When the going gets tough keep the cash flowing

Each customer situation is different. A small business partner could find itself with an excellent opportunity within a major government department or organisation.

For channel players who have not experienced a downturn, help and advice from seasoned partners is worth its weight in gold. In Avnet’s chosen role as an industry consolidator we have survived diverse economic situations.

Cash is a perennial favourite of all finance directors, but is even more valuable when credit is hard to get or when it is being offered on dangerous terms.

A sound financial decision is to manage existing credit arrangements and cash collection rather than simply grabbing extra credit or extended terms only to face bigger problems in the future.

Ignoring warning signs or burying your head in the sand is another sure way of running into trouble further down the line. Keeping communication open between distributors, business partners and customers means that individual financial solutions can be developed.

Each customer situation is different. A small business partner could find itself with an excellent opportunity within a major government department or organisation.

In these circumstances, we think assigning the proceeds directly to the distributor may be the best solution, allowing the business partner to go after larger sales opportunities.

While some distributors may favour a blanket approach to financial solutions for all resellers, individual tailor-made solutions are the most flexible and beneficial in the longer term.

Complex IT solutions often involve multiple vendors. Juggling several lines of credit brings extra pressure. Therefore, the ability to access lines of additional working capital through leading asset-based financing companies may be essential for large individual projects.

More established global distributors may know the right financing companies for reseller needs.

Working this way can provide a consolidated source of working capital for everything from equipment purchases to payroll. It will also allow the partner to capitalise on pre-negotiated, extended financing terms from multiple vendors through short-term account receivable and inventory purchasing programs.

Another area to consider is leasing. Leasing options can help customers benefit from the latest technology without capital commitment.

Business partners can combine vendor independent integration of hardware and software with their own services into a single leased asset.

This reduces the risk of technology becoming obsolete and customers not paying large invoiced amounts.

However, finding the right lease and processing the paperwork often puts people off this option. A well connected distributor will remove the entire administration burden, leaving partners to do what they do best – sell and deliver technology.

So in tough times, explore all options that will keep the cash flowing, manage existing lines of credit and new opportunities on a case by case basis.

There is help available from those with the knowledge and stability to provide the right financial solutions for individual business partner requirements.

Matthew Gower is vice president of sales for Avnet Technology Solutions UK and Nordic