Leasing: Are SMB VARs Missing Out?

There's a simple way for small-business solution providers to make more money and get closer to their customers, yet more than 99 percent of them aren't doing it, according to at least one distributor.

The missing ingredient is leasing, which accounts for less than 1 percent of all financed orders through Tech Data, the Clearwater, Fla.-based company told CRN last year.

Leasing is a multibillion dollar opportunity that solution providers leave on the table, while direct vendors such as Dell and Hewlett-Packard cash in, according to channel financing executives.

The problem is that leasing is misunderstood by both resellers and end users, the executives said. Vendors and distributors are hoping to remedy it through education and a series of new programs designed to entice more activity.

"A lot of it is providing [resellers] with the training that they need to bring proposals out to their customers," said Greg Hansen, senior financial services manager at Tech Data. "I think most resellers out there will use leasing on occasion, and a small percentage is going to present it as a normal part of their proposal."

Leasing should grow in popularity because it meets end-users' needs, he said. "They want to pay everything on one invoice—that's where leasing comes in and does it for them. It's a way that they can manage the assets in their company more efficiently," he said.

Leasing is already commonplace with several direct vendors. For their most recently completed fiscal years, Hewlett-Packard touted more than $4.1 billion in financing revenue, while Dell reported $6 billion.

For Tech Data, as well as other distributors and vendors, the next step is spreading the word that leasing makes sense for many solution providers and end users.

Ingram Micro and Cisco Systems Capital are expected to announce this week the Cisco Express Leasing program in which the distributor will serve as a middleman for solution providers looking to lease Cisco Systems solutions to SMB customers.

Cisco Capital has extended its zero percent progress payments promotion through July 28, 2007, to Ingram Micro Cisco-certified partners on deals of $50,000 or more. Resellers will receive payments on a negotiated schedule based on deployment milestones while end users begin making payments once deployment is complete. During the initial 120-day period, Cisco will not assess finance charges. Resellers must hold the Cisco IP Communications Specialization in order to participate.

"It allows us now to really scale this thing and reach smaller resellers that we are not able to reach directly. Now they can get the one-stop shop through Ingram," said Maryann Von Seggern, director of worldwide channel development at Cisco Capital.