Avnet Hall-Mark Lends Financing A Hand

The Tempe-based distributor has created a pilot program to help solution providers with collections, credit checks and other financing functions.

The initiative is part of Avnet Hall-Mark's new Value-Added Distribution Services group, headed by George Brookler, senior vice president of VAD services.

"A key issue we hear from VARs is that they need more credit and more credit options. With this [program, we will look at the end user's creditworthiness, and we'll bill with the VAR's name," Brookler said. "We've done that before, but it's been billed jointly under both names. Now it will be only under the solution provider's name."

Solution providers don't need to buy from Avnet Hall-Mark to outsource collections, Brookler said. The distributor plans to charge a flat fee plus a percentage of sales for the service, but the cost structure has not been determined, he said.

"The pilots will determine what the fee is. Obviously, this must cost less than the traditional way for solution providers to want to do it. If we can save them enough money, the fee becomes irrelevant and they have more financially sound options," Brookler said.

Lilien Systems plans to outsource its accounts receivable to Avnet Hall-Mark but expects other benefits besides saving money, said Geoffrey Lilien, president and CEO of the Mill Valley, Calif.-based solution provider.

"From the analysis we did, it'll be fairly close to our current costs, but it takes a headache away from us," Lilien said.

Avnet Hall-Mark will perform end-user credit checks and collections for Lilien Systems, and the solution provider has an option to outsource end users' credit risk to the distributor, Lilien said.

Avnet Hall-Mark pays the solution provider after a preset number of days, or pays the margin up front, for a small charge, Brookler said.

"We believe we can collect faster and better because we are a bigger company. These are skills we developed on the Avnet [Enterprise Solutions side, and we brought them over to Hall-Mark," he said. "You may want us to do collections only for big deals. Or you may want to do all the invoicing. Or you may want us to do it all. It's customizable."

Avnet Hall-Mark also plans to offer enhanced marketing, logistics and technical support to solution providers as part of the VAD services initiative, Brookler said.

"If you look across our values, for marketing, we can create demand. For logistics, we can create solutions. With technical services, we can help with support. We're building services the VAR can come to for incremental resources," he said. "In these economic times, they might be a little light in one area."

Avnet Hall-Mark will not share customer information with Avnet's Enterprise Solutions reseller arm, Brookler said.

"Our CEO [Roy Vallee has set up standards of integrity that are adhered to by all groups and influence how we do our job. In all my years here, I've seen maybe two or three [channel conflict situations that reached the executive level, and all were resolved in favor of the VAR. Most are resolved at the sales manager level," Brookler said. "We pay the sales rep and let the VAR have the sale. You solve the problem and move on. It's not worth the effort or the trouble to have a problem."

In fact, Avnet Hall-Mark is looking to leverage Enterprise Solutions' resources to market to solution providers, Brookler said.

"Enterprise Solutions has implementation teams for network implementation, storage management, server consolidation and project management," he said.

Lilien Systems has no qualms about turning customer information over to Avnet Hall-Mark, Lilien said.

"We have a good, long relationship with them. They get all the end-user information anyway for support contracts and shipping addresses, which they have never abused," Lilien said.

Transferring end users' credit risk to Avnet Hall-Mark should improve his company's cash flow, Lilien said.

"If a customer is late, it doesn't create friction or finance charges between us and Avnet," he said.

"I think this will help our business. I think they can do a lot of this more efficiently than we can."

Photography by Jon Gipe for CRN.