Fury at Compaq rebate delay

Delayed payment of rebates under Compaq's Special Pricing Agreement is putting the squeeze on the channel, claim angry resellers.

Delayed payment of rebates under Compaq's Special Pricing Agreement (SPA) is putting the squeeze on the channel, claim angry resellers.

Computer Reseller News was contacted by a number of Compaq partners who said that the vendor has been slow to give rebates, causing inevitable cashflow problems for the channel.

The SPA is a long-running scheme introduced by Compaq last year whereby a reseller receives a rebate on the price paid to a distributor to guarantee a large sale.

A Compaq partner, who wished to remain anonymous, said: "I have to pay my distributor at the end of each month, but Compaq does not pay me for at least another month. My reward for winning a contract is to carry debt for as long as it takes Compaq to sort it out."

Another source also questioned why Compaq did not simply reduce its prices universally. "If they can give me up to seven per cent off the distribution price in rebates and still make a profit, why are the products not cheaper to begin with? It would save a lot of administration work and allow me to win business in my own right," he said.

"Smaller resellers cannot afford to take on the negative cashflow that SPA necessitates, but we are forced to do so because partners are not going to win big orders with Compaq's standard distribution prices," he added.

Mike Morgan, channel sales director at Compaq, declined to comment on individual cases, but acknowledged the need to speed up the company's payment system in general.

"Rebates have to go through a validation process which can vary in time to complete. We are making improvements to the system all the time, but partners must remember that the rebates are there to satisfy the customer, not the reseller," he explained.

Alex Tatham, commercial director at distributor Ideal Hardware, said he had known resellers that had been forced to wait up to four months for their rebates.

"Compaq tries to give resellers a special price to win large deals, but from an administrative viewpoint it is a nightmare. Payments are delayed at a time when the industry does not need it," he said.

First published in Computer Reseller News