It's a miracle the IT channel ever does any business when high street banks remain reluctant to lend and SMBs hesitate to borrow. And, in the main, business partners are reluctant to talk about financing options.
Trade credit is seen by too many as a panacea or the only option for financing a deal when in truth it should be the last resort. Even then it is extremely dependent on the reseller's credit rating.
There are many financing options available.
Typically, banks do not have the knowledge or experience to be confident about lending money for IT purchases. However, distributors may have alliances with brokers and leasing companies with access to vendor funding or partnerships with other finance houses.
Brokers, for example, can put together leasing deals with multiple layers of funding spread across several suppliers. This streamlining may make it easier for end-user companies to borrow for major IT investments.
Distribution can simply make the introductions or remain involved to help put the financing deal together.
It is not only end-user customers that need help. As more business partners change their business models to include cloud services, they may find themselves needing to invest in datacentres and colocation.
Rather than using capital reserves, resellers should take advantage of the financing deals available.
It is time to start breaking down the traditional barriers and for the channel to learn how to borrow and lend. IT investments can be funded directly via vendor financing arrangements or third-party brokers; either way valuable capital can be retained to fund growth and cashflow.
Perhaps resellers see a leasing company or broker as an added complication. Maybe compensation plans are focused on one-off payments.
Is it that business partners do not have the resources to dedicate to managing alternative payment methods? It's hard to pinpoint a single reason but a lack of awareness of options is probably high on the list.
At a recent vendor conference business partners were asked if they were actively engaged in helping to arrange financing. Fewer than 30 per cent of those present raised their hands.
If you look at reseller company websites, financing is rarely mentioned. Yet the ability to provide leasing contracts and finance could soon become a differentiator.
Distributors have the right contacts. A distributor may act as a facilitator to help build relationships.
It's time to take another look at how channel deals are financed. Organisations don't think twice about leasing company cars, and the same principles can be applied to IT.
The key is working with distribution and getting financial services professionals involved as early as possible. And once a first deal is done and a relationship formed, the deals can get bigger and better.
Dee Weston is UK and Ireland credit manager at Avnet
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