‘Cash Flow Is King:’ Ingram Micro Lease IT Program Is Key To A Recurring Revenue World

Ingram Micro’s Lease IT program can help partners reduce balance-sheet burdens and close deals in an as-a-service world.

As more IT customers demand the low up-front cost of the as-a-service model for everything from hardware to technical services, solution providers’ balance sheets have to be stretched over months and even years to see a return on their investment.

“It can be quite draining on your business,” said Deborah Gannaway, principal with DG Technology Consulting, Tampa, Fla. “With a small business, cash fl ow is king.”

To address that issue, Ingram Micro has several options that can reduce or eliminate that burden and help solution providers win deals with the as-a-service model, said Kelly Carter, vice president of Ingram Micro Financial Solutions.

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“Our theme for this year is we are bringing solutions that get our partners to ‘Yes,’” Carter said. “We’ve been finding that over the last several years it is getting more challenging for our partners to bring their customers solutions that work for them and also work for partners from a cash-flow standpoint or a working capital standpoint.”

As more products and services are delivered through the recurring revenue model, partners are increasingly hamstrung by a “long collection cycle,” she said, which limits growth and keeps them from maintaining a healthy balance sheet. Enter the Ingram Micro Lease IT program.

“We have leases that are a traditional lease on the surface but where the partner can bundle in services, and we’ll invoice their customer for one monthly solution for that hardware and services solution,” Carter said.

Scott Johnson, owner and chief operating officer of KLH IT Solutions, Minnetonka, Minn., said the Ingram Micro Lease IT program helps the solution provider bring in new customers, increase revenue and close deals faster.

“I have actually gained new clients from that because I was the only person the customer was talking with who provided them with a leasing option,” he said. “I have closed deals faster because it is much easier for an owner or board of directors to approve a smaller monthly payment than a large one-time capital outlay.”

There is also an education piece, which Carter said teaches solution providers to get in early with their customers and have a “deeper” conversation about what they are trying to accomplish, their end goals for technology and how they want to consume and finance it.

“As soon as they do that, they’re positioning themselves in a different way with their customer. They’re now seen as a sophisticated partner and problem-solver versus just fulfilling a product solution. That’s what we teach them to do,” she said.

“If you are a partner who has limited working capital on your balance sheet, and someone comes to you and they want you to provide a monthly, as-a-service technology solution, to fulfill that you may have to hire engineers, buy product up front, and pay sales commission on the entire solution,” Carter said. “That is a big cash outlay today, and you’re going to be paid over time for that solution. That’s a big problem. The solutions that we’re bringing allow them to get funded up front for that solution.”

Johnson said Ingram Micro gives him nearly all the capital from a long-term contract as soon as the deal is signed.

“They give us 75 percent of the project up front. From a cash-fl ow perspective, that’s huge,” he said. “We don’t have to wait 90 days until the project is done to get payment. Seventy-five percent comes to us as soon as we give them the invoices, the last 25 percent when we’re done. I can’t say enough about it.”

Ingram Micro also handles billing, he said, so “the whole burden” of chasing down customers for monthly payments, or watching receivables is no longer his to bear.

“That goes a long way, especially when you are a small business like we are,” he said. “As long as you can keep things fl owing appropriately, it helps your business grow.”

Sam Barhoumeh, CEO of Chicago-based ReadyNetworks, a 180-employee MSP with a global presence, said Ingram Micro not only has the services but the distributor can wrap them around partners in a way that doesn’t create more work for the solution provider.

“If you are in hunt-and-growth mode and your capital is being invested in engagements, and you’re stuck capitalizing for three years, why would you do that if you didn’t have to?” he said. “Take the money up front, let them run the credit and billing on the back end.”