Intelisys Partners: Master Agent's Financing Programs Are Right On The Money

Whether a telecom-focused solution provider is just hanging out its shingle or has been in business for years and is looking to transform its sales strategy, a helping hand can mean the difference between success and failure.

Getting a solution provider business up and running can be a challenge because commissions on telecom services don't roll in immediately -- it can often take months before any revenue is seen. At the same time, traditional VARs that have built their business around large, one-time payments associated with hardware sales are starting to turn their attention to services and the cloud. But these companies aren't accustomed to the smaller, monthly recurring revenue model.

Master agent Intelisys is helping its partners pivot their businesses and clear these financial hurdles through its Partner Investment Program and Advanced Commissions Program. The focus of the two programs is to put money into the hands of partners so they can grow their business faster. Intelisys has loaned more than $4.7 million so far to partners, according to Michael Ketchum, vice president of finance for Intelisys.

[Related: CRN Exclusive: Intelisys Goes Global, Expands Sales Partner Model Into Europe]

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Intelisys, Petaluma, Calif., distributes business telecommunications offerings and cloud-based services via its channel of supplier and sales partners. The master agent launched the Partner Investment Program in 2010 as a way to provide financing to partners that have an existing base of business with Intelisys, instead of these partners having to go through a bank.

Banks often aren't familiar with the commission model so it can be hard for some solution providers to have the collateral needed for a loan, Ketchum said. Today, Intelisys has helped about 60 partners take advantage of the loan program.

"Banks don’t understand our business and Intelisys does. It's a symbiotic relationship," said Tom Gesky, CEO of telecom consultancy Resourcive, an Intelisys partner that has taken part in the Partner Investment Program for the past three years.

Pelham, N.Y.-based Resourcive got its start in 2001 and works with large clients spending upward of $100,000 a month in telecom services. The solution provider joined Intelisys' program when its rapid growth began to outpace the rate that capital was coming in, Gesky said.

"We started to grow and the pipeline grew by over 50 percent a year … that pace quickly created a short-term gap," he said. "[This] is a great program that accelerates how fast partners can get access to that working capital."

The Partner Investment Program requires partners to bill at least $25,000 or more in monthly deals through Intelisys. These qualified partners are then eligible to apply for a $25,000 term loan and, as their business grows to $50,000 a month, the partner is then eligible for an additional $25,000 loan, Intelisys' Ketchum said.

"As long as partners continue to develop this base, they can keep borrowing money without the fees that they would incur if they used a bank," he said.

The Partner Investment Program is geared toward existing Intelisys partners. Intelisys takes the money back over three years by withholding some commissions each month.

"It's a really great program, and a lot of our partners have used the money for some pretty creative reasons," Ketchum said. "Some have used it to hire new sales or support people, and we've had a couple partners use it for things like down payments on office buildings."

Intelisys' Advanced Commissions Program, meanwhile, was launched in 2013 and was designed to attract traditional VARs to the Intelisys' sales partner community. Intelisys realized that the Partner Investment Program wasn't covering all partner types and allocated $2 million for the program's launch, Ketchum said.

The Advanced Commissions Program lets qualifying partners choose how they receive commission payments, including one-time, up-front payments based on full contract value, traditional monthly recurring payouts, or a combination of both. The program allows Intelisys to give financial advances against a provider's existing order for two years, interest free.

The program lets partners secure up-front financing before moving to a recurring revenue model, an especially helpful model for VARs looking to transition to selling services, or solution providers just starting out, Ketchum said. Around 100 partners have joined since its launch.

"There is typically a cap -- it's about $5,000 a month in payments, but if a [solution provider] is just starting their own business, that keeps them going until the revenue really starts to flow," he said.

TeleSource Partners, a Tampa, Fla.-based telecom solution provider, is one partner who has taken advantage of the Advanced Commissions Program to "keep the lights on" when it was first starting out and waiting on recurring revenue-based commissions to roll in.

David Lallemand, founder and CEO of TeleSource, worked in direct sales for two carriers since the 1990s. In 2013, Lallemand started his own telecom agency serving connectivity and voice services to enterprise clients and began partnering with carriers through its relationship with Intelisys.

"This program was the financial backing I needed to get my company working because it does take quite awhile to get large accounts up and billing, so that gap was wide. You can only live off of savings for so long before it becomes financially unviable," he said.

TeleSource's first customer was a large enterprise organization, and the timeline for getting it up and running with a contract and billing for the services took time. Once TeleSource had the contract in place, Intelisys started delivering a monthly payment against the value of the contract, Lallemand said.

Intelisys gave TeleSource the option to pay back what it had borrowed through its commission at an agreed-upon rate, with zero interest, he said.

"The program offers much more flexible terms and conditions without having to qualify like you would at a bank. [With Intelisys], all I needed was a contract, and Intelisys knows what that is worth," Lallemand said.

At the end of the two years, Intelisys can work with the partner to move them off the Advanced Commissions Program or move them into a term loan, Intelisys' Ketchum said.

Intelisys' financing programs for partners were firsts in the master agent community, but aren't the only programs available today.

Sandy, Utah-based master agent Telarus also offers similar plans for its sales partners. Telarus' Commission Advance plan provides advances to qualifying partners that can be used for hiring, rebranding or deploying new technology. The master agent's Custom Commissions program, meanwhile, allows partners to receive commissions up front, in a monthly recurring model, or in a combination of both.

World Telecom Group, Malibu, Calif., also offers financing programs that allows partners to borrow against commissions that will be coming in, or pay some or all commissions to a partner in an up-front payment model, according to the master agent's CEO, Vince Bradley.