Distributors Fine-Tune Financing Programs

Both broadline powerhouses like Ingram Micro and Tech Data and more SMB-focused distributors like D&H Distributing and specialty distributor ScanSource are sweetening the pot and looking to grow their credit programs.

Ingram Micro, Santa Ana, Calif., recently increased credit limits for 425 partners with credit lines of $50,000 or less, extending the solution providers' credit lines from an additional $5,000 up to double their previous line. In total, Ingram extended an additional $5.6 million in credit to customers.

"We're trying to be very proactive and reach out to our resellers to find out not only what they need for credit today, but what they need long term," said Kelly Carter, director of credit, Ingram Micro U.S.

The distributor also is trying to drive leasing programs, especially in the area of managed services where solution providers are beginning to offer leased hardware bundled with managed services offerings.

"In the past few years, [our leasing program] hasn't grown as much as we hoped it would. We really found that in the SMB market a lot of people didn't have an awareness," Carter said. "Our focus this year is really on education."

Broadline competitor Tech Data also is stepping up its partner education efforts around credit and leasing.

Tech Data has scheduled seven events in 2007 where it will give presentations to customers on its financing options to improve the way customers deal with both Tech Data as a supplier of credit and with other financial institutions. The meetings, according to Scott Tillesen, director of SMB credit at the Clearwater, Fla.-based distributor, have been very successful.

"One of the things we promise the attendees is that if they bring updated financial statements, we'll do a credit review on the spot," Tillesen said.

SED International's Hold Check program can offer resellers higher lines of credit and longer terms than they typically can through other distribution financing vehicles, said Rob Kalman, vice president of U.S. marketing at SED, Tucker, Ga. Through the program, resellers fax copies of checks to SED, and the distributor holds them for an agreed upon term before they are converted to a check via a special printer and then deposited. The VAR does not have to mail a physical check.

ScanSource is trying to make applying for credit easier, taking its application online and launching a new flexible credit program that increases credit limits for VARs to $500,000. It will be rolled out this quarter.

"It's a very paperless transaction with quick turnaround," said John Reed, director of secure credit at ScanSource, Greenville, S.C.

ScanSource also is seeing success with its promotion efforts as more customers take advantage of its credit programs. The company saw a 41 percent increase in reseller participation in its credit programs between 2005 and 2006, extending 33 percent more credit.

To interest customers in its financing and credit programs, D&H, Harrisburg, Pa., is doubling the cash-back discount it gives participants in its Flex Credit Account program. Customers will receive the 2 percent benefit as a discount on purchases now through June.

"This is a way to be a revenue, incentive and margin-builder for our customers," said Joe Chaudoin, director of credit and financial services at D&H.