Leasing Helps VAR Close End-Of-Year Deals

"I had so many projects that I was counting on, almost $2 million worth that moved into 2009 that were supposed to happen in 2008, just because of financing," said Bob Carter, a regional account manager with ScanOnline.

During the quarter, Carter received an e-mail from distributor Avnet Technology Solutions about a fourth-quarter leasing program. He turned around and reeled it out to his customers to see if that might accelerate any projects, even though the solution provider had virtually no experience leasing IT solutions. A hook stuck.

Douglas Battery, a Winston Salem, N.C., battery manufacturer, was looking at a handheld scanning solution for its warehouse, but a capital expenditure of nearly $100,000 just wasn't left in the budget for 2008.

Carter, ScanOnline owner Ronnie Luck and Lee Pickler, owner and director of technical services, had drawn up a Motorola solution that the customer liked, but it looked like it would be another deal postponed until the new year. But the customer grew interested when ScanOnline offered the 36-month, interest-free leasing option available through Avnet Capital Solutions, a financing division of Avnet Technology Solutions that launched last January. Avnet Capital was launched to help VARs finance projects that might not qualify for financing under programs like IBM Global Financing or HP Financial Services.

"When [the end user] saw that, that pretty much allowed us to do it in 2008. That's what expedited the deal, the leasing program from Avnet," Carter said.

ScanOnline helped the end user apply for credit with Avnet and the leasing was approved in 15 minutes, Carter said. Since that project was completed last month, the solution provider has closed another deal through another Avnet financing program, 90 days same as cash, and Carter intends to present leasing and other alternative financing options more often in 2009, he said.

"Up until now, people have gone with capital expenditures. We're going to be pushing more options in 2009. Before, it was something that people were not interested in," Carter said.

Stories of solution providers winning deals that may otherwise be pushed back through leasing or other alternative financing means is becoming more common, said Lisa Friesenhahn, vice president of leasing, services and remarketing sales, Avnet Technology Solutions, Americas.

Requests for credit through Avnet Capital have tripled in the second half of the year, compared to the first half of the year, Friesenhahn said.

"I attribute it to having a program available that our partners have utilized. In the past, some of partners not selling IBM or HP, where there was a captive lessor, didn't have a financing program that Avnet was offering them. Second, the market is driving it. Cash is king and if you can get financing that is an attractive, it helps," Friesenhahn said.

Douglas Battery is pleased with the results and happy it went the leasing route, Carter said.

"I also think that technology keeps getting better and leasing gives them the option to stay with newer technology," he said. "They're very happy with the speed it went through too. They bought some other equipment, like cabinets for some terminals, that they were able to put on the lease.

Choosing leasing can also help solution providers stay closer to customers, Carter said.

"They're going to be doing some other things within the next three years. This gives us a foot in the door that stays there," Carter said.

More solution providers' sales forces are also quickly educating themselves on leasing options because more customers are inquiring about the subject, Friesenhahn said.

"Our partners were either really comfortable going into a CFO and talking about the financial end of IT acquisition, or they really weren't comfortable and they just wanted the [purchase order] and to move on to the next deal," she said. "As we go into 2009, we're definitely going to say that sales forces are paying more attention to financing."

The leasing program that ScanOnline used for Douglas Battery expires on Dec. 31, but Friesenhahn said more financing programs will be introduced in the first quarter of 2009.

"We don't want the same promotions back-to-back. But we've already started to look at what we're going to roll out for Q1. They might have some of the same flavor, but not the same ingredients," she said.

Friesenhahn suggests that solution providers who have not considered leasing in the past, or have not trained their sales force on leasing benefits, should do so quickly in 2009.

"If I was a solution provider, my biggest thing would be how to get my sales force comfortable with having financing/leasing discussion with the end user. If they cannot, then how do you have appropriate resources to reach out to them? That's the goal. I don't think you need every sales rep at a partner be able to talk to a CFO to sell financing lease, but you need to know how to get into that conversation," she said.