GE Commercial Distribution Finance (GE) is offering resellers a credit lifeline with a new financing package tailored specifically for the channel.
VARs often suffer as a result of late customer payments but still have to pay distributors within a set time. To ease the issue, GE is offering a receivables financing package that allows VARs to source more products from distribution.
It works by GE inspecting a VAR's sales ledger. If it has a number of large orders pending and needs extra credit, GE will agree to pay the distributor on behalf of the reseller for the entire amount.
Once the VAR has invoiced the end-user, a copy is sent to GE, which takes over the invoice and pays the VAR up to 90 per cent of the total. The rest is settled when the customer has paid GE the full amount. GE makes money by charging a percentage of the total transaction.
The firm also offers an inventory purchasing scheme aimed at distribution, where if approved, a VAR will receive additional credit, sometimes double the amount it holds with a distributor, to buy kit and fulfil one-off large orders.
Paul Nash, regional sales manager at GE, said: "The inventory finance programme brings much-needed credit into the channel, and in conjunction with our receivables financing packages will help growth in this sector."
Nitin Joshi, a partner at PKF, said credit funding could help the channel economy. "The much promised upturn in IT spend last year did not happen. One reason for this was a lack of third-party financing available to resellers to get more credit," he said.
But Eddie Pacey, director of credit services at Bell Microproducts Europe, was cautious. "I welcome anyone that offers the channel a range of finance options. VARs often fail to take advantage of them, but firms such as GE use the same underwriting principals as most others," he said.
"VARs get more joy from distribution in terms of flexible credit lines. Unless someone is prepared to match the risk distributors take, I see no change."
Chief exec Jens Montanana claims Logicalis performed well despite 'currency headwinds'
All the photos from last night's event, which saw over 600 people congregate at the Hilton London Bankside
Five year deal with Essex NHS Trust will cover 400 sites, including hospitals, clinics and GP practices
18 individuals and three companies walked away as winners at CRN's inaugural Women in Channel Awards last night