Going For The Gold
FAMILIARITY BREEDS FLEXIBILITY
For most businesses, financing is a way of life, notes Hansen’s colleague Scott Tillesen, director of credit for SMB accounts at Tech Data. “If you look at the Fortune 500 companies, there isn’t a single one that doesn’t have bank debt,” he says. “[VARs] just need to spend a little bit of time and make the contacts.”
NuMega’s Cole has already seen how establishing bonds with creditors can pay off. Once, when a former client missed a payment, Cole notified his lender and was not charged penalties or fees. To prevent the same problem from recurring, NuMega opened a line of credit with a local bank, citing its healthy relationship with prime lender Ingram Micro. “A bank is willing to take a
chance with a small company if you pay your bills on time and build a relationship,” Cole says. “You have to be proactive.”
Carter cites other advantages that come from forging close ties with lenders. For example, Ingram Micro will sometimes temporarily extend a familiar technology provider’s line of credit based on its customer’s financial health, which enables smaller VARs to compete more effectively with larger, better-financed rivals. “We can be very flexible,” says Carter. “We do a lot of temporary increases when [known borrowers] get a larger deal.”
CASH OR CREDIT?
Studying up on financing options in advance is important as well. “The challenge most NASBA members have is they typically are scrambling to gather finances when something extraordinary happens,” according to NASBA director Jim Niekamp. “At a minimum, we think every member should be prepared with a leasing offering and a largedeal financing plan.” Of course, solution providers can always fall back on old standbys such as credit cards and cash on delivery (COD). Credit card interest rates can be exorbitant, though, effectively wiping out a chunk of a VAR’s profit. And at $7.50 per delivery, COD fees can quickly add up. Just the same, D&H has seen dramatic growth in COD billings due to increased use of its electronic fund transfer service. “It automatically drafts [a VAR’s] account in three days,” says Chaudoin. “We have many customers on it.” Despite all the financing options available, money still doesn’t grow on trees. But partners savvy enough to plan ahead and build relationships with multiple finance partners can reap a healthy crop of funding, no matter how small or large they—or their deals—are.
KEY TAKEAWAYS
• BY HELPING CUSTOMERS SPREAD PAYMENTS over time, financing can help you increase your average deal size and close deals more quickly. VENDORS, DISTRIBUTORS, AND BANKS are all viable sources of credit for resellers and integrators willing to invest time in building ongoing relationships.
• DON’T WAIT for a major opportunity to come along before researching your lease options. At a minimum, have a standard lease offering and a large-deal financing plan ready to go when needed.
• STEER CLEAR OF HIGH-FEE OFFERINGS such as cash on delivery and credit cards whenever possible.
• ALISON DIANA is a freelance writer and editor who has covered the channel and technology for almost 18 years. She lives in Merritt Island, Fla., and can be reached at alisondiana@hotmail.com.
