Easing customer cash flow may multiply the deals too

Sharratt: Distributors should offer better terms than the manufacturer

Manufacturers are always under pressure to lower prices and increase availability yet much can be achieved through constructive financing that shifts the burden away from small, more vulnerable partners.

Manufacturers have the products, but the channel is best placed to develop and offer the application and deployment skills end users want. This cannot be neglected just because trading conditions have been tougher.

All channel players must work together to counter customer arguments against the deployment of new technology.

Partners should focus on the finance side of the sale and demonstrate understanding of budget constraints and financial processes.

End users most likely have less cash than before and may be seeking ways to use revenue budgets rather than capital expenditure to get projects off the ground.

For partners to trade prudently and serve customers, they will need to ensure their network of sale – that is, the manufacturer, distributor, ISV and VAR team bidding for the business – provides financial flexibility.

You need extended credit through distributors that offer better on-demand stock and credit terms than offered by the manufacturer. This has to be achieved with little or no increase in the actual purchase price.

Work with partners that can offer better credit terms and smart financing to customers. Work with manufacturers that understand the size and scale of the opportunity and are able to react accordingly to your needs.

You should also enable customers to realise a return on investment (RoI) on projects before they have to pay for a new implementation.

One particularly good way is to build relationships with a smart finance company. Manufacturers, with their size and reach, can bring together channel that are prepared to offer the right financial solutions, spreading the financial burden for all parties.

For example, if a customer is finding it hard to pay for a particular solution, there are leasing companies that will bundle the solution including hardware, software, airtime, services, and maintenance, for a monthly fee.

The end user can defer the first payment for a few months. This gives the project time to settle in and for RoI to be realised before any capital outlay is needed.

The project can almost pay for itself. The money saved each month through the new solution actually goes towards paying for that new system.

To control their own costs and better prepare themselves to extend such smart financing, the channel should be trying to reduce inventories and build alliances with local or European distributors.

Distributors hold stock and are geared for extended credit and payment terms with their customers where smart leasing or finance solutions are not palatable. When manufacturers, distributors and partners pool their resources they can achieve RoI for customers quickly and more cost-effectively.

Business can be done and businesses improved. This is a lesson in customer support from which many of the banks holding back from supporting business today could learn.

David Sharratt is EMEA channel director at Honeywell Scanning & Mobility