Ingram Cancels Credit Lines For Some Resellers

"For our resellers who don't have a significant need of product business from Ingram Micro, it's more logical for everyone to have a relationship where it's an electronic funds transfer or credit-card [arrangement, or they can use alternative financing like our SelectSource or leasing," said Pat Collins, senior vice president of sales at Ingram Micro.

The distributor would not quantify the number of solution providers affected, but Collins said 75 percent of the names on a list considered for elimination were found to be inactive.

Ingram Micro cited four possible motivations for closing an account: failure to do at least $10,000 in product and service purchases in a 12-month period; failure to place at least one order per quarter; failure to pay within stated credit terms; and failure to maintain a sustained favorable personal and/or business credit rating.

Accounts were examined on an individual basis, Collins said. "We did go through an extensive process check with the sales organization, where we looked at things such as who are newly recruited customers and who are customers that may carry high-level certifications that we are trying to build strategic relationships with," he said.

Ingram Micro sent undated letters to some solution providers informing them that their credit lines were being canceled on Sept. 4. However, some solution providers did not receive the letter until the week of Sept. 9. "We went to place an order Friday morning [Sept. 6 and found out it was effective retroactive to the day [stated in the letter," said Anthony Harbour, president and CEO of Harbour and Associates, a Richmond Va.-based solution provider. "This was something [about which we had no warning."

Credit-card orders placed through Ingram Micro's Web site also are not simple transactions, Harbour said. Orders are placed on hold until they can be authorized over the phone, he said.

Ingram Micro plans to improve its credit-card transaction process, Collins said.

Some solution providers may have been cut despite meeting the stated requirements, said Alan Weinberger, chairman and CEO of The ASCII Group, a Bethesda, Md.-based organization representing 2,000 solution providers. "It seems to be administered a little differently [than the letter stated. There are many individual dealers screaming," he said.

Some partners may have had solid credit with Ingram Micro, but may have been dropped if their overall credit rating wasn't favorable, Collins said.