Jump on board the credit bus

It is wrong to generalise channel owners as plain stupid. Not all are. But on the issue of trade credit, faced with exciting platform rollovers and refreshes, many VARs seem to adopt a kamikaze-style approach to business development. They seem happy to turn away lucrative pieces of business simply because they have inadequate trade-credit availability.

However, many distributors have a sympathetic approach to scenarios where the large pipeline needs feeding, but their own credit support is inadequate.

The modern credit manager is a sales enabler and I have written about this more times than I have eaten chicken tikka masala. There is an increasing use of special credit tools: escrow accounts, waivers from factors, trust accounts and direct invoicing from distributor to third-party leasing.

Leasing penetration in the channel is dire. This is odd as leasing has been a feature of capital purchases for more than 30 years. On the question of credit providers, there are many innovations. IBM Global Financing, for example, has an impressive range of products available in a channel that has yet to understand its real benefits.

Like dumbing down everywhere else, channel players need to run for the bus. In a difficult trading climate, there is no room for order takers or clumsy, lazy buyers.

The channel experienced difficulties in the 1990s when much of the asset lending and invoice discounting community was tarnished by the somewhat reckless conduct of a handful of their own players.

These were practitioners of churning; terminating an agreement on one day, reaping massive termination fees in the process, then, with unnerving ease, signing up the Phoenix the next.

Thankfully, this practice is now less widespread, but there are, of course, always exceptions to the rule. The bottom line with these funders is that many are creative and there is always a way of delivering a sizeable purchase order.

Never let it be said that distributors are anally challenged bank clerks. They are more in tune with VAR sales ambitions than ever before. Increased channel credit availability from Computer 2000 is an excellent example. All it needs now is for VARs to take it up.

Nitin Joshi is founder of ChannelMoney

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