Between rampant inflation, supply chain issues, geopolitical concerns and more, it’s not a great time in the economy right now, and signals seem to suggest that will continue into the next year with the dreaded “r-word” of economics being thrown about.
So as solution providers put together their financial plans for 2023, Ingram Micro Canada has a message: Don’t give up on growth.
The distributor is touting its financial services business as a critical differentiator for partners to keep growth going even in a tough time. The general thinking around the technology industry is that between the momentum of digital transformation across every industry and the need to optimize businesses to control costs in a tough economy, infrastructure technology and services are likely to see continued growth even if the broader economic picture gets darker. According to Ingram Micro Canada CFO Kelly Carter, how customers are interested in paying for that investment in technology is expected to change.
“It’s more important than ever that you’re offering financing options. Customers may be more challenged with cash flow, or even just trying to conserve cash, and you can help them by bringing them a pay-over-time option,” Carter said. “It helps your business as well. It helps you preserve cash so you can continue investing in growth, and that’s our message: don’t stop growing during the downturn.”
The distributor has a lot of relatively recent case studies to back that up. Looking back at the downturn phase at the beginning of the pandemic, Carter said partners making heavy use of financing options from the distributor were growing their busing 25 percent faster than their peers.
“Some of them were quadrupling their business during that period,” she said. “It’s really about how you take what’s happening in the broader market and find ways to improve it. Channel financing is one of the ways you can do that.”
The distributor is running its annual no-payments promotion in the short term, with a twist. This year, the deferred payment promotion includes financing the interest charges during the 60-day payment-free period.
In terms of a longer-term strategy, the distributor continues to build its business of financing managed services engagements, using the value of the services contract as collateral. Ingram Micro Canada country chief executive Bill Brandel says that the financing option is particularly attractive to solution providers looking to move from a more traditional resale model to build up their managed services, allowing them to scale their managed services more quickly than they could without the payment-up-front benefit of financing.
He also lauded Carter’s decision to bring in an expert in financial services, David Wilson, to help the distributor proactively bring unique financing options to partners. Carter said Wilson has been instrumental in assisting the distributor in moving more partners from thinking about financing reactively to making it a proactive part of all their offerings.
“When Kelly first got here, we were doing the financing, but we weren’t seeing the adoption,” Brandel said. “I’m happy to see now that we have a healthy pipeline of leads, and we’re starting to see deals come through where we’re able to help partners manage their capital.”
And those growth rates should continue to rise as the company’s financing options become more connected to its new all-encompassing Xvantage digital platform. Already, the distributor is using the Xvantage platform and the ML engine behind it to automatically identify solution providers that would benefit from credit line increases. Over time, Brandel said, connecting financing more directly into Xvantage, where solution providers will be doing their sourcing, quoting, ordering and more, will take more friction out of getting financing involved in more deals.
“Sometimes the biggest obstacle [to financing] is the sales team because they view it as slowing down the process,” Brandel said. “With Xvantage, we’ll be able to have the financing flow through with the transaction, so it doesn’t interrupt the process. That will be a huge advantage for our partners and make us more efficient.”
Anthony Mackle, Carter’s US-based counterpart, is fond of saying that the only deals he can’t close with financing are the ones he is unaware of. Carter has a similar challenge to resellers, asking them what they would accomplish with improved cash flow.
“Channel financing allows you to do that and gives their customers more ways, different ways to buy from them,” Carter said. “What can that mean for their business? Come talk to us, and let us help you grow.”