back to article Shift to cloud computing puts squeeze on resellers' finance

The channel's long-term shift to cloud computing and managed services will force resellers to totally rethink historic forms of finance. Financial mechanisms including invoice discounting (ID) have long been used as an overdraft facility by some smaller and mid-market dealers to support cash flow but this avenue looks likely …

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  1. The Godfather
    Pirate

    Reseller business cash flow

    My point centres on the growing issue Resellers have of not getting the fullest support of banks to fund their own growth. This is quite aside from the on-premises capex model that will change faster than many imagine.

    There are new, growing, profitable managed service businesses that need to recruit, find suitable premises and generally invest in people and infra-structure first in order to see yield and growth. Banks, the traditional providers through either direct loans/overdrafts or asset funding (both fixed and current) now consider the services model higher risk and therefore less palatable. This is despite the undoubted quality at times of the Reseller client or the management and integrity of he Reseller.

    Many do not invoice in advance but in arrears and yet still face obstacles as funders view this asset as less secure than traditional book debts for product and sevices supplied.

    Vendor finance arms will not jump in and finance Reseller businesses; their focus is funding the end user purchase and this is a quite separate exercise. Bank lending to SME clients and Resellers separately is "as tight as a Gnats arse" despite government "initiatives". One generally has to seek funders outside of the main high street lenders with less hang-ups and greater risk appetite.

  2. Pirantech
    Thumb Up

    An Interesting Perspective

    This is a good perspective and one I never took on board until now. One thing I considered whilst reading is the risk shift. With cloud services and moving to a general opex stance, its much less risk on the part of the customer and more on the reseller, especially if their reliant on debt factoring for cash flow.

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