Smoother path to profits

Vendors need to help resellers smooth out their cashflow, argues Florian Malecki

Cashflow is king, yet resellers often find themselves locked into contracts that require a huge outlay for licensing agreements for customers' security services. Yet they may never fully use these, as it is tricky to estimate the number needed.

Cashflow is often the difference between succeeding and going under. Vendors have a role to play in helping resellers avoid having to over-extend and stretch their cashflow to the limit.

Without shaking up the business model a little, many resellers will not be able to survive because of the large outlays required annually in security servicing agreements.

We need to take a fresh look at vendor financing. The right model is to mutual advantage as it deepens reseller relationships.

The idea is to improve the flexibility and liquidity of partners' investment in the vendor's services, while lowering the partners' capital and operating expenses.

Monthly service billing can be made easy, flexible and cashflow friendly for managed services providers, helping them align monthly service revenue with licence expenditure.

In addition, it can reduce sunk cost and service procurement time, provide cost insights quickly, and add flexibility to the management of services.

You can also give resellers the ability to customise or change the number of clients or GBs on applicable services when required.

Rather than having to invest in a full year of services, partners could have the option to limit their cash outlays for services into shorter time increments. Service duration can now be set in terms of days rather than years, or to end on a specific date.

Hence, partners can better align outgoing cashflow for support contracts and subscription services with incoming cashflow from clients.

It is an industry-wide responsibility to provide offerings that support the reseller and enable your business rather than drain your resources or restrict your operation.

Vendors need to keep the channels buoyant and helping with cashflow is the way forward in these difficult times.

Florian Malecki is senior EMEA product marketing manager at SonicWall