Tech Data Rolls Out New Technology Financing Options

Technology distributor Tech Data is rolling out 60-day financing for technology resellers and several technology leasing options for resellers to offer to their end customers in an effort to help resellers close deals, even as IT budgets are frozen and financing becomes scarcer.

In such an environment, offering end-user companies a credit option can help close deals, experts say, by smoothing out the price objection. End-user companies can realize the benefits of the technology now without having to pay a big upfront price that would likely not be in the budget in 2009. Instead, they can spread out the cost over a few years.

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That's why Tech Data's moves come at a crucial time for solution providers and IT buyers. While commercial financing for technology did not initially feel the hit from the financial crisis and meltdown, in late 2008 some companies that served the space were beginning to pull back.

GE Capital notified customers in late November that it would end its technology leasing business in 60 days. IBM ended its flexible credit program aimed at small business owners. And IBM Global Financing tightened its open lending practices a bit to favor solutions from IBM and some of its key partners such as Lenovo. Plus, Textron Financial Services pulled back from offering financing on a broad base of technology deals to just offering financing on technology the company manufactures.

"The credit market place today is causing people to prioritize, to do what's important, more strategic," Scott Tillesen, director of credit at Tech Data, tells Channel Insider. "What we are seeing [with some companies dropping out of certain types of financing] is the effect of that."

To fill the gap, Tech Data has struck some new partnerships with third-party financing companies, such as Castle Pines Capital, an affiliate of Wells Fargo.

"Through them we've been able to offer extended terms of Cisco products," Tillesen says. That means resellers can have 60 days to pay for orders instead of 30 days. That also means that resellers can preserve the net-terms account with Tech Data that they use to support existing IT purchasing needs, according to Tillesen.

In addition, Fujitsu and Kaspersky Lab recently partnered with TDCreditServices and GE Capital Solutions to provide resellers with 60-day terms for their products. Other vendors offering 60-day terms through Tech Data and GE Capital Solutions include Fortinet, Hewlett-Packard, Lexmark, Lucent, SonicWall and Sony.