IBM and D&H extend their credit offerings to partners

IBM Global Financing has brought a popular credit program from the U.S. to Canada that will extend credit for the purchase of both IBM and non-IBM equipment, and distributor D&H Canada has increased its credit lines to select partners by as much as $50,000.

With more credit entering the market stakeholders say it’s not about a credit crunch; rather, the goal is giving the channel the flexibility and resources to grow their business and, consequently, vendor and distributor business as well.

IBM (NYSE: IBM) launched its IBM Flexible Credit program in the U.S. last year and recently announced the program is now available to the vendor’s Canadian partners. Christian Boserup, financial client executive with IBM Commercial Financing, said before bringing the program to Canada IBM needed to get the French-language components in place.

“We saw fairly quick there as a big positive reaction from the market,” said Boserup of the U.S. program, which now has 600 participating partners.

The key goal behind the program, he says, is flexibility. IBM Flexible Credit is a 24/7 online platform through which resellers can access a credit line of between $100,000 and $400,000, depending on their credit rating. No financial statements are required, and IBM says the funding is incremental to any other financing partners may already have in place.

Boserup says IBM wants to provide flexibility through the whole cash conversion cycle, on both the supplier side and the dealer side.

“We’ve learned over the years that all technology doesn’t get delivered overnight,” said Boserup. “Depending on the end user, the nature of the delivery and the degree of services, these projects can take a long time. Flexibility for the reseller to allow them the time they need to complete the project is an area where we could help.”

A key part of the program is that it will not just to apply to the purchase of IBM equipment. Once a partner is approved they can tap the credit facility for purchases from a list of authorized suppliers and distributors, including Levovo, Cisco Systems, Dell, Microsoft and HP.

The goal, says Boserup, is to eliminate the time and effort many partners are expending having to apply for and manage lines of credit with multiple vendors.

“It wouldn’t be very supportive for us to say we can only help you with a small part of your project,” said Boserup. “We’re in this with both legs. If a partner has a project they need supported, we’ll do it.”

The program will see each participating vendor or distributor sponsor an interest-free period of 30, 45 or 60 days. For that period the sponsor pays the interest, there’s no charge to the partner. If the partner chooses not to pay off the facility after this initial period, Boserup says IBM will charge competitive market rates.

The first IBM partner in Canada to sign-on to the program was Think Communications, a Victoria, B.C.-based solutions provider that also resells Lenovo, Microsoft, Cisco and Lexmark.

Think Communications co-founder David Saele says cash flow is a constant concern for today’s resellers. While 10 to 15 years ago margins were in the double digits, today he says things are much tighter. A good part of his day is spent looking deal by deal, and deciding if they event want to bid on it, or can take it if they win the business.

“When you’re looking at a substantial opportunity with a client one of the things you look at is how quick you’re going to get paid, what line of credit you have with the supplier, and how you can maximize your cash flow,” said Saele.

With the ability buy multiple vendor products under one financial umbrella and having the flexibility around the terms of payment with IBM’s Flexible Credit program, Saele says he’s able to go after deals that traditionally he couldn’t have even looked at.

He adds it’s also going to save Think Communications money. The reseller is currently challenged by dealing with 160 different suppliers, and juggling multiple lines of credit. They’ve had to expand their accounts payable department, and are spending more and more staffing hours dealing with supplier issues.

“We’re hoping they bring in more (vendors) so we can consolidate it all under that one umbrella,” said Saele.

Hitting a milestone, D&H extends more credit

D&H Canada is participating in the IBM program, sponsoring an interest-free period for its reseller partners. The distributor has also extended its own credit programs, announcing recently it was increasing the credit lines for hundreds of its resellers by as much as $50,000/month.

Greg Tobin, general manager of D&H Canada, says eight months into D&H’s entry into the Canadian market it has already surpassed its year one goal of 1000 new customers, passing 1100 recently. Tobin says the select credit extensions are a sign of gratitude for their support.

“One of the things we take very seriously is to grow the business on behalf of our partner customers as well as our vendor partners,” said Tobin. “As we’ve been growing the business we see if we support our partners we’re going to be rewarded in the long run.”

The parameters for being granted the extended credit include constantly utilizing the credit line and keeping it in good standing. Paying your bills and being in good standing has its privileges, says Tobin.

He adds IBM’s Flexible credit program will be a good complement to D&H’s own credit program. He likes the online registration, and that it’s open to multiple vendors.

“It’s very important,” said Tobin. “The more caveats you put onto a program and the more handcuffs you put onto it the more restrictive it becomes. (The flexibility) is a very good thing.”

What credit crunch?

While there have been reports in some circles of a credit crunch hitting the partner community, IBM’s Boserup says there’s been no tightening of credit in Canada. Rather, if there’s a credit crunch, he says, it’s the problems many resellers face as they succeed and grow.

“As they experience growth and get invited to bid for larger and larger projects that’s normally when they start to have some pain as well,” said Boserup. “It’s more about supporting our resellers and growing their companies then it is trying to keep alive a reseller with questionable credit worthiness.”

Think Communication’s Saele agrees he hasn’t seen a credit crunch in Canada yet, adding we’ve been fortunate in that regard. However, he says he is monitoring the situation and making sure his business is ready should the economy sour.

“As a business owner its one of the things I’m keeping an eye on with the U.S. economy as restricted as it is,” said Saele. “We’re definitely looking for ways to shore-up credit and making sure we’re in a good strong position should something happen here.”

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Jeff Jedras
Jeff Jedras
A veteran technology and business journalist, Jeff Jedras began his career in technology journalism in the late 1990s, covering the booming (and later busting) Ottawa technology sector for Silicon Valley North and the Ottawa Business Journal, as well as everything from municipal politics to real estate. He later covered the technology scene in Vancouver before joining IT World Canada in Toronto in 2005, covering enterprise IT for ComputerWorld Canada. He would go on to cover the channel as an assistant editor with CDN. His writing has appeared in the Vancouver Sun, the Ottawa Citizen and a wide range of industry trade publications.

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