Posted by Haley Woods on Jul 6, 2021
As technology continues its exponential growth and evolution, its economic effect on global business operations is equally evolutionary. Companies are expected to adjust internal processes to accommodate new working conditions, rethink go-to-market strategies and -sometimes- completely recreate their brand to keep up with the changing times. How are organizations supposed to accommodate all of these changes in the face of decreased consumer spending, slowing economic growth and the possibilities of global recession?
As an expert in creative leasing and financing solutions for over 20 years, Tech Data’s VP of Financial Solutions, Wayne Peters, has an answer - financing. Recently, Haley Woods, Senior Manager of Business Operations for Tech Data Capital(*) sat down with Wayne to discuss some of the benefits of IT capital financing.
Haley: Wayne, thank you for sitting down with me today to discuss what is becoming an increasingly relevant business strategy. How do you see financing being the answer to a lot of the concerns businesses are having right now around capital budget?
Wayne: Because markets are unpredictable, companies are looking for ways to strengthen the balance sheet by holding onto cash that would otherwise be used for capital expenditures. At the same time, they need to execute on the IT projects that have been put on hold this past year. Money is relatively inexpensive right now. It makes sense to leverage financing for IT acquisitions. With the right payment solution, they can free up their budget to invest in other areas or simply improve upon their financial position in the short term.
Haley: What are customers asking for right now?
Wayne: Customers are asking for payment solutions that mirror how they utilize product such as annual payments for software licenses and monthly payments for product bundles that include hardware, software and services. We are also seeing an increased demand for embedded terms into sales quotes and Statements of Work (SOW), as well as consumption type models that have some form of a variable pricing component based upon usage.
Haley: What advise can you give vendors and resellers who are looking to add value right now?
Wayne: Partner with a financing company that has a clear understanding of the channel and will enable you to provide payment solutions to your customers. Look for a partner that will customize the solution to your products and selling motion rather than provide you “out of the box, cookie cutter” solutions. They should also have the ability to deliver those solutions to your customers, under your branding, if you choose.
Haley: What do you think the rest of 2021 and 2022 holds for tech sales and the IT financing industry?
Wayne: Right now, there is pent up demand as we are seeing the economy start to open up. Much of this is driven by the chip shortage on the OEM supply side. That will have to be solved for in the mid-term. Software continues to be a steady growth opportunity; more specifically, security. From a financing perspective, the market has been in a growth mode since COVID-19 first happened and doesn’t show any signs of letting up. As I mentioned at the beginning of the conversation, the market is unpredictable which drives companies to hold on to cash. Financing provides a mechanism to maintain a strong balance sheet while making strategic technology acquisitions. In addition, the product buyers and sellers are more aligned (than any time in recent history) to payment solutions that match “how they sell” or “how they buy” technology. I think the IT financing industry will continue to be in a growth mode for at least the next three to five years.
Simple payment solutions allow customers to acquire the critical technology solutions for their business but conserve capital and strengthen the balance sheet. As a business professional, your role isn’t to be a leasing and finance expert; rather to be their success partner, providing them alternatives that support the growth of their business and strength in the market.
Introducing purchasing options that ease capital outlays and keep their IT systems up to date, builds trust and positions you a trusted advisor. For more information on how you can leverage this information, email us at financingteam@techdata.com
(*) Tech Data Capital is the captive finance arm of Tech Data, which launched early 2020.
