The tightening credit market, along with a push from customers away from capital expenditure to operational costs, is forcing several channel partners to look at alternative financing options to get deals over the line.
Last week at its Channel Exchange event, Cisco’s global senior vice-president of channels go-to-market, Edison Peres, highlighted vendor financing as one tool partners could use to improve cash flow and secure customer spending in the tougher economic climate.
Several other tier-one vendors are reporting rising local demand for their finance offerings. IBM director of global financing, Brett Vincent, said IBM provides three types of financing: Inventory financing; client financing such as leasing; and global asset recovery services. The vendor has recently re-released its buy now, pay later program due to rising interest.
“We have seen a large increase in customers and partners requesting financing. It’s a sign of how we can help with cash flow and financial management,” Vincent said. “Financing has always provided for business partners to improve cash flow. Because we pay partners faster and they don’t have to wait for customers to pay them, they have the cash to fund other things.”
But IBM was being selective with who it provided financing to, Vincent said.
“We are in a very strong cash position, but we need to be cognisant and focus resources on areas which best help partners, customers and IBM,” he said.
Microsoft provides financing for end customers through its channel for software, services and hardware sales over $3000. Program development manager for Microsoft financing, Katrina Braund, said sales more than doubled in the last year through the Smart Pay program. Significant growth was coming from small and mid-market customer segments.
“To some extent, this is driven by our broader overall reach into the reseller base,” group manager for partner strategy and marketing, Nick Mayhew, said. “The more partners we get to use that, the more we expand into other customer segments. It’s been growing fast in terms of the size of the deal and the quantity of deals.”
One particularly strong area of interest was the business applications space around Microsoft’s Dynamics CRM and ERP offerings.
“In a tough climate, you need to work harder on getting these types of projects,” Mayhew said. Microsoft will launch specific initiatives around these offerings this week.