Meet the 'reseller friendly' financiers

With the right financing partner, VARs will be able alleviate cashflow pressures on their businesses, explains Tim Clements

Businesses today realise that in a world of intensifying competition and ongoing commoditisation, innovation is the most effective way to create sustainable competitive advantage and differentiation. That’s as true for the chief executives of large multi-nationals as it is for reseller bosses.

As we emerge from one of the longest slow-to-no-growth economic periods in recent memory, decision- makers are confronted with new global competitive threats, such as the removal of geographic trade barriers and the rise of economic powers from the Far East. Those new forces drive a need for growth, not retrenchment, which is one reason decision-makers are pursuing growth and productivity strategies to address competition.

The question of how to fund that growth while improving productivity should be at the forefront of resellers’ minds. They are constantly under pressure to keep costs down and margins up, squeezed by suppliers wanting the best price for their products. Meanwhile, customers demand low prices and immediate delivery.

The right financing partner can alleviate the pressure on the business by ensuring that suppliers get paid on time, while providing enough flexibility to respond to changes in businesses’ cashflow requirements, as well as helping those businesses keep up with market demands.

Traditional bank lending, although reliable, is often unable to provide the necessary flexibility for resellers that want to grow their business. Traditional financiers do not always understand the needs of a reseller that has to satisfy the demands of sup-

pliers and customers simultaneously. To overcome this, resellers should look for an innovative financing partner: one that understands their business, the dynamics of the technology industry and the channel, but also has a proven track record.

Keep a look out for innovative offerings from financiers that provide a full range of services, from working capital solutions for your business to end-user financing for your customers. Financiers able to provide funding at each stage of supply as the product moves through the channel can often construct one-off tailored products to support large individual deals, as well as support everyday needs.

There are a number of ‘reseller friendly’ financiers, often already working with major IT suppliers and distributors that have been set up specifically to provide resellers with flexible working capital solutions. Resellers can choose from inventory financing, accounts receivable, backed credit lines or term loans to help their businesses to grow faster. Large individual orders can be accommodated through a lease-offset arrangement, where the risk is transferred from the reseller to the end-user, thus enabling the reseller to obtain credit facilities for large transactions.

Inventory financing schemes can be very important to resellers, because they can be used to pay any supplier that has signed a deal to participate in the programme. This means resellers can choose their suppliers based on their products, prices and service, rather than credit availability.

Suppliers’ invoices will get paid on time, but on a pre-determined date that suits the reseller. This gives the flexibility to structure terms that fit businesses’ cashflow.

Freeing up working capital in this way not only helps to preserve credit lines, but also lets the reseller concentrate their efforts on new sales opportunities and the all-important growth of the business.