REGIONAL CHANNELS
There are a range of programmes we can
consider, including open account credit,
deferral payment, extended payment
terms, a revolving line of credit and
assignment of proceeds programme.
Vimal Kocher
at their sell-through points of the supply
chain. “Distributors generally have credit
lines with vendors and they pass on those
credit lines to the resellers. However, the
credit given to the resellers in many cases
is longer than distributors get from the
vendors. This is funded by distributors for
which they generally have credit lines with
banks,” explains Sawlani.
The lack of proactive vendor initiatives
in regional channel financing by itself
creates a drawback from financial and
banking institutions to support financing
and credit lines for regional channel
players including value added resellers,
resellers and system integrators. Another
setback in the process is the lack of
transparent audited and compliant books
from regional channel players.
Elaborates Stephan Berner, CEO
at Help AG, “Possibly the main hurdle
remains the unwillingness of banks and
financial institutions to play an active
role in channel financing. In the region,
channel economics are still very much
value-added distributor driven and
resellers are especially dependent on their
value-added distributors for financing
large deals. This will only change once
banks in the region become accustomed to
IT leasing and financing. This will depend
on transparent financials on the part of the
resellers and greater trust on the part of
the banks.”
“I think the regional mentality that
credit is solely the responsibility of the
value-added distributors is something
that needs to be addressed. Vendors need
to be more active in this role and could
help resellers with schemes such as back-
to-back agreements within the two-tier-
supply chain,” continues Berner.
In other words, an active role by
vendors and immaculate book-keeping by
channel partners are critical components
of taking channel financing in the region to
Leading and progressive distributors
also play a supportive role in generating
innovative and extended financing for
their channel partners. Comments Vimal
Kocher, Managing Director, Arrow
Enterprise Computing Solutions Business,
Middle East, “We are happy to work with
solution providers on a range of financing
and leasing plans that help them invest
in new initiatives, boost competitiveness,
improve cash flow shorten the sales cycle
or simplify budgeting. There are a range
of programmes we can consider, including
open account credit, deferral payment,
extended payment terms, a revolving
line of credit and assignment of proceeds
programme. By including a financing
alternative with technology solution,
this helps position solution providers as
trusted advisers that address the business
needs of both the CIO and the CFO.”
Vendor touch
Sven Jirgal, Vice President and Chief Operating
Officer, Cisco Capital.
a higher level. As an example, by building
a proactive relationship with its vendor
partners and maintaining a high standard
of global audit compliance, leading
channel players like Help AG are able to
make headway in the practice of regional
channel financing.
Says Berner, “We work hand-in-hand
with our distribution and vendor partners
to achieve the highest possible flexibility
while minimising the risk at the same time.
This will be achieved by full transparency
of our business model, audited fiscal
year reports, cash flow information and
further relevant information a partner
may deem important. A few of our
partners understand that the challenges
of fast growing organisations like Help
AG are different compared to other
organisations in the market and therefore
handle financing and payment terms very
professionally without jeopardising their
internal controls and policies.”
Some vendors like Juniper Networks
and Cisco support the channel through
their financing and leasing group entities.
Explains Kristian Kerr, Head of Channel,
Alliances and Commercial for EMEA for
Juniper Networks, “In EMEA, Juniper
Financial Services is a channel financing
programme that is available to channel
partners to provide to their customers.
The programme is designed to help
resellers grow their Juniper Networks
revenue with competitive customer
financing solutions that will ultimately
build stronger, more profitable working
relationships between Juniper Networks,
the channel and end customers.”
There is always a
financial wrapper
because there
is always an
investment, return
on investment,
and total cost
of ownership
discussion.
Sven Jirgal
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