HP Rolls Out New Partner Financing Initiative

While the move will not change the amount of funds HP makes available"which is determined by revenues under the new Partner Capitalization program"Gold and Platinum partners will no longer be eligible for subsidized flooring other than those offered special exceptions. Rather, HP officials believe those funds could be better used by smaller partners that have otherwise good sales, implementation and fulfillment capabilities but lack the ability to offer financing that could seal more deals.

"Sometimes lack of capitalization challenges their growth," says Kevin Gilroy, HP's senior vice president of worldwide SMB segment operations. Likewise, many Gold and Platinum partners are typically less likely to need capitalization from HP, he says, stopping short of accusing some partners of using the funds other than what they are intended. "Flooring programs were never meant to go to cost, they were designed to capitalize," Gilroy says. "We overcapitalized some very strong partners who don't need flooring."

Gilroy admits that those large partners who were advised of the changes were not thrilled, but he was confident it wouldn't impact them in the long term. He declined to elaborate.

"Let's leave it that there are some well-heeled, strong balance-sheet partners that don't necessarily need a flooring subsidy," Gilroy says.

The new program, which adds system servers and storage products to the mix (the old Channel Capitalization program only included imaging and printing products), also shifts management of HP's initiatives to its key distribution partners"Ingram Micro, Synnex and Tech Data. Previously managed by HP, the move will lower administrative costs while giving distributors more flexibility to be creative in the offering of capitalization to partners, says Margie Young, HP's program manager for partner development and programs

"The [distributors] are really good at designing a full portfolio of creative credit offerings," Young says.

Ron Cook, president of Connecting Point Technology, a Las Vegas-based solution provider, agrees, saying a distributor could, say, float payment due dates by 15 days, eliminating the need for partners to secure secondary financing while awaiting for customer receivables to be paid.

"It can be real beneficial," Cook says.