Harvey Norman has become the largest PC leasing outfit for SMEs in the country, thanks to a deal with small ticket lease provider Flexirent.
The partnership between the two companies, which enables small businesses to lease computer and office equipment through Harvey Norman franchise stores, has captured the fastest growing sector of the equipment financing market. Harvey Norman expects to generate more than $70 million from rent or leases through its partnership with Flexirent this financial year.
According to Flexirent joint managing director David Berkman, the IT sector grew 17 per cent in 2000.
"While larger ticket IT leasing has been solid for quite a few years, we are now seeing a remarkable growth in small ticket leasing," he said.
Harvey Norman has been in business with Flexirent since 1996. It has been a very successful partnership for the retailer, with the amount spent on computers significantly increasing in comparison to an average cash sale.
The key, according to Harvey Norman's computers and communications division general manager John Slack-Smith, lies in the scheme's flexibility.
"Eighty-five per cent of our business done through Flexirent is with business people, and the majority of those sales are small businesses," he explained. Businesses have the ability to trade up and, with technology moving at such a rapid pace, upgrade cycles are getting smaller. Customers can take a two, three or four-year lease term and trade up during that period. It is extremely flexible."
Customers can trade up on their equipment before their lease term is up by paying out the lease. They then come to an agreement of a fair market price and those older systems either go to auction or are sold second hand through other retail channels. Around 65 per cent of Flexirenters trade up to a new PC inside of three years, according to Berkman.
Slack-Smith said the payment system also helps businesses with issues such as cashflow, but its biggest benefit was the ease of the application process.
"Inside of 10 minutes customers can make a purchasing decision, in another 10 minutes they can have worked out the details and be out the door with the products.
"Small business people are very time poor traditionally. This is an easy-to-use method which saves time, hassle and money."
The Flexirent payments are tax deducible for SME businesses if the equipment is used for work.
The number one purchase using the Flexirent option is a personal computer package with PC, printer, scanner and associated software, Slack-Smith said.
Photograph: Harvey Norman CEO Gerry Harvey.