Distributor Comstor says it has turned financial planning and management into a vital component of the distributor/VAR partnership.
Chris Wong, UK Finance Director for Comstor and Westcon explains; “We have focused on keeping the financial relationship with our partners as flexible, simple and streamlined as possible for our sales teams, with the emphasis on engaging with the Financial Directors of our partners in a thorough, tailored review of the options open to them.”
These options span a variety of financial schemes that many resellers have yet to fullyappreciate or exploit as part of their business model.
As part of the Westcon Group, Comstor can draw on the significant financial muscle and banking relationships of the group to support an extensive range of credit facilities and schemes for its partners. The availability of flexible credit is widely regarded as a critical success factor for growth in the channel and Comstor offer a number of creative options to support partners credit needs.
Comstor recognises that financial management programs, whatever their potential impact on paper, are only as effective as the relationships between them and their partners. In support of this, Comstor actively engage at the Finance Director level, with Chris Wong making frequent visits to reseller FDs to work as a peer and mentor.
He describes the group’s approach as follows; “We have efficient robust back room processing systems and adequate levels of insurance as our defence, solid controls and effective reporting as the midfield and creative business support as our attack. Not so much total football as total finance!”
One reseller to have benefitted from this .total’ approach is 2e2, as Finance Director Martin Oxley explains “Chris and the finance team at Comstor UK certainly add value to the role of Distributor. Their flexibility and customer focussed approach has been a tremendous benefit to us in day to day transactions and enabling us to develop our business.”
Evidence of Comstor’s commitment to this approach can be seen in the 90 visits made by Chris Wong to meet with partner management teams in the last 2 years, with the focus of those meetings firmly on developing effective business relationships rather than providing a terse reminder of commercial terms.
Comstor’s Credit Accelerator program provides a perfect illustration of the transparency and shared understanding required to make financial management a platform for business development rather than an inhibitor. This program allows Comstor to flex available credit and terms for partners who are prepared to engage in forward planning and open discussions about their business models, and to maintain this discretionary support on the basis of the partners financial behaviour rather than arbitrary limits determined by a system alone.
The Comstor approach has been particularly beneficial to partners who have found themselves on rapid and steep trajectory of growth, which is often not the ascent to financial success that many would assume.
Ian Evans, Finance Director at security specialists ITC explains: “Our challenges have been mostly financial, where, for example, customers have delayed payment to us with a knock on effect on our ability to pay suppliers. Comstor have given us a good credit limit … giving us more time to collect from our customers before we have to pay Comstor. Furthermore, Comstor have been willing to ring-fence certain deals enabling ITC to obtain additional credit above our credit limit. We in turn ring-fence those deals to give Comstor additional protection on their investment in us.”
Evans is in no doubt about the impact for ITC, adding: “ITC has been able to deliver services that it might have otherwise been forced to hold back on through not having sufficient credit available. As a result we have grown faster and in the past year grew our revenues by 27%.”
Leasing is another clear financial benefit for resellers and Comstor has worked extensively with Cisco Capital to promote a range of deals with various terms and specific offers focused on new technology deployments and upgrades. Resellers can benefit from the Cisco EasyLease 0% finance over 36 months, and Low Rate Financing including up to 2% rebate on 4 or 5 year deals.
Other options made available to Resellers include various generic security instruments such as Directors Guarantees and Deeds of Assignment which are tailored to meet the individual needs of the reseller.
In addition to the perceived working capital benefits of leasing, the programs are designed to offer convenience by removing the burden and spreading the costs of Cisco technology ownership and disposal. Comstor partners can combine Cisco hardware, software, services and complementary third party equipment into one strategic acquisition.
Partner benefits from leasing extend across the lifecycle of the solution, protecting the customers investment with the right payment schedule, term duration and end of lease options for their business including outright purchase, capped and market-value residuals, and like-for-like equipment returns.
With many end user customers focused on creative use of financing options to improve their own balance sheets, and the availability of tools and programs from vendors, distributors and independent software providers it is probably time to take a look at the financial dimension of their partner relationships as a driver for growth in 2011 and beyond.