How Vars can avoid the finance burden
Resellers and distributors should adopt a new approach towards credit when it comes to fulfilling big deals, writes Steve Feacey.
What is the biggest threat to developing big new business opportunities for the average reseller? Is it a lack of customers? Declining confidence? The international situation?
Actually, it's none of these. The customers are out there, and they want resellers to fulfil their needs. The thing that is holding Vars back is the inability to obtain the credit to do the big deals their customers want.
We are a relatively young industry. Even many leading resellers have relatively short track records, and in an era of increasingly scarce credit, willing distributors are held back by the difficulty of getting credit insurance.
The absurd thing is that often the reseller's own customer is a blue-chip company with a solid credit rating. But the harsh reality is that, in credit terms, the reseller is the weak link in the chain. Perversely, its own credit standing gets in the way of doing the deal and making it more secure.
It is a ludicrous situation created by faltering confidence in the finance sector, and it's not resellers' fault. They have two options: complain and try in vain to shift the cautious attitudes of lenders and insurers, or seek out ways to use the customer's own solid credit rating to do the deal.
Anyone who has ever tried to change the mind of a high-street bank will know you are more likely to get Tony Blair to admit fallibility than shift entrenched financial attitudes.
So it's good that Vars are taking the pragmatic view and thinking positively. Overcoming the credit gap simply requires all concerned to be willing to approach the problem in a new way.
Think about it. In most cases, the reseller has the ability to deliver to the customer, the distributor and/or vendor has the financial clout to give credit, and the end-user has the credit-worthiness to gain credit.
It is obvious that resellers and distributors should work as partners to deliver what the customer wants, each bringing their own strengths to the party.
Such an approach requires a true partnership between vendors, distributors and resellers, going beyond the traditional supplier/customer relationship.
As with all the best business arrangements, the incentive is mutual benefit. There must be a win-win situation for all involved.
If we can free Vars from the burden of trying to be finance houses, they will be able to concentrate on their core business of creating IT solutions for their customers.
Steve Feacey is regional manager at Midwich.