HP's Financial Services Arm Seeks Channel Involvement

Executives at HP, which Tuesday announced its first financial quarter incorporating Compaq's sales, said HP Financial Services [HPFS finances installations of the company's products to commercial and public-sector end users protects customers' investments and provides other offerings.

Irv Rothman, president and CEO of HPFS, based here, said the organization sells to channel partners that resell the financial services and to HP's own sales force. HPFS also sells directly to HP customers.

"We call on the channel directly and also use the HP sales force to leverage its relationship with the channel," Rothman said.

"We want to be attractive to the channel," he said. "[Partners want fast turnaround on credit, they want to get paid, and they don't want the paperwork to be complicated."

HPFS guarantees partners that credit will be approved within a predetermined time period. If that doesn't happen, "the [solution provider gets a few bucks extra" to compensate, a policy first instituted at Compaq, Rothman said.

Natalie Knudson, president of Modern Business Technologies, Madison, Wis., said her firm resells HP's leasing products "whenever possible. Especially in the small- and midsize-business market, leasing is a real alternative for customers [who can pay a $500-a-month investment, rather than $20,000 that they need in cash in ten days.

"[HP sets the terms and [processes the acceptance of the customer, but we use [the financial products as a tool for sales, and we handle all of the communications" between HP and the customer, Knudson said.

Pat O'Connor, vice president of marketing for distributor Pioneer-Standard's relationship with HP, said that his company has been HP's top leasing partner since 1998.

The partnership "is about more than just leasing PCs," said O'Connor. "There is life-cycle management around the desktop. As [HP and Compaq come together, there are a variety of products that may not continue over time." HPFS' customer assurance program lets Pioneer-Standard tell clients their investment will be protected should HP's product road map change, O' Connor said.

Rothman said HPFS has a long way to go. "We believe that since we are distribution-model neutral, which means we will finance an HP sale whether it is distributed directly or through the channel, that our penetration rate in the channel [stands at about 10 percent," he said.

"We think it should be a heck of a lot higher," Rothman added.

HP this week reported third-quarter revenue of $16.5 billion, compared with $18.2 billion on a combined company basis in the prior quarter.