Tech Data Offers Tipsa To Get More Credit Where Credit Is Due

Tillesen has helped the Clearwater, Fla.-based distributor create a series of credit-building workshops that will continue throughout the year. The workshops aim to educate on what solution providers need to improve their credit portfolios.

“It&'s not something new, but it&'s something we&'d like more people to appreciate. We work hard at helping resellers become better businessmen,” Tillesen said. “We show them what they need to do to grow their business, entertain their creditors and help service their end-users better.”

This week, Tech Data offers the first workshop of 2006 at a gathering of telephony resellers in Fort Lauderdale, Fla., Tillesen said.

“The presentation is how to avoid getting voted off Credit Island. It&'s not geared toward their Tech Data relationship but toward their relationship with all their credit partners,” he said.

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The most popular way for solution providers to improve their credit is through alternative financing such as flooring companies, leasing and using the end-user&'s credit, Tillesen said.

“We&'re trying to encourage our resellers to sell a leasing alterative. Distributors like it because we get paid directly from the leasing company. The reseller is a beneficiary because they don&'t have to collect from the end user,” Tillesen said.

In addition, solution providers seeking more credit should provide all their creditors with the most up-to-date information possible, he said.

Solution providers should set up a credit distribution e-mail list to regularly notify their creditors, he said. “That is for good or bad things to say. We also encourage them to make their Web site attractive not only to customers but to creditors who like information such as office locations, ways to contact management, company history, company size,” he said.

Solution providers also need to proactively make sure that creditors have correct financial information about their companies. “Dun and Bradstreet can control a lot of data points online.

Subscribe to a monitoring service so that your information is not inaccurate or out of date. For example, liens placed by tax agencies could be corrected but not removed. You need to clear up those reports. People reading them could affect your automated credit score,” he said.

Creditors also like to read financial statements on a regular basis, he said. “They don&'t want year-old information, they want 30 days old. If there&'s prep delays, send draft copies and mark them as such. No financial statement is worse than a bad financial statement,” Tillesen said.

Finally, payment history is important. “There are reporting associations that distributors belong to that tell us how well our customers pay us and everyone else. Resellers should know what they do with me is visible to others and what they do with others is visible to me,” he said.

At least one solution provider increased his company&'s credit line tenfold after going through the workshop. MX Consulting Services, a Raynham, Mass.-solution provider, raised its credit line from $100,000 with Tech Data to $1.1 million through several creditors since its president George Kavgic sat through a credit workshop a couple of years ago.

Since then, the company&'s annual revenue has doubled to $2 million.

“The way [Tillesen] explains it, the better our folder looks on his desk, the better chances we have for credit,” Kavgic said. “The key was our paydays. We are a 30 [day terms] account, typically paying in 21 days or less. That&'s what keeps everybody happy.”

When it comes to collecting payment from customers, Tillesen offers one piece of advice: maintain a consistent route of escalation. “Whether it&'s a phone call, then a letter, then a collection agency, then a lawsuit, whatever your route is, do it consistently. It&'s less confusing internally. We have salespeople trying to sell more to customers when we&'re also trying to collect,” he said.



>> Financing alternatives: Third-party financing companies utilize end-user&'s credit worthiness; leasing.
>> Provide full and timely information to creditors: Inform creditors of management or ownership changes and keep company&'s Web site up to date.
>> Keep contact with credit reporting agencies: Ensure that credit agencies have correct information regarding any completed or pending tax liens or lawsuits.
>> Financial statements: Provide year-end, quarterly or monthly updates—these are still very important to creditors.
>> Payment history: Make consistent, on-time payments. Distributors and other financing organizations have access to your payment history.