Those in the equipment leasing and finance industry can agree - 2020 and 2021 have been transformative years for IT financing. Economic uncertainty has forced companies to conserve capital creating significant momentum in businesses shifting to subscription-based (“as-a-service”) and software-defined solution models.
Software Defined Solutions
Software-defined solutions have had a dramatic effect on the IT financing industry. Just a few short years ago, it was difficult to find lenders willing to finance IT solutions containing 20%-30% soft costs (software and services, etc.). Today, most of the financing solutions we see include soft costs of 50% or more. The flexibility afforded in financing solutions with all costs built in and paying in fixed installments is critical. Providing a monthly, quarterly or annual payment structure for software-only solutions is now a standard IT financing offering. It gives end users the flexibility to stretch their dollar, with upfront discounts on multi-year agreements. And, it lets them pay for it over time.
When it comes to capital expenditures, today’s business leaders are more forward-thinking. In April 2020, requests for IT financing increased more than 150%. Since then, when compared to 2019, monthly increases have been steady, ranging between 50% to 100%
While the subscription, “as-a-service” concept has been discussed for years, only over the last few has this financing option gained traction. For resellers, the ability to offer solutions that bundle hardware, software, services, and maintenance into a single monthly subscription price is a high value offering. By eliminating upfront capital and having established -predictable- payment streams, end user customers can execute their budgets more effectively with more cash immediately available. It’s a win-win for the business as their needs are met with the least financial impact.
A Benefit to Resellers
Subscription models also enhance the reseller’s ability to manage their own cash flow as well with no large outlay upfront to acquire hardware. Using Tech Data Capital, partners are able to offer their customers installment options. Once all financing is approved all parties are paid in full and the end user customer is billed in installments according to the terms of the financing agreement.
Strategically aligning with a finance partner allows resellers to expand their current offerings without the need for dramatically altering their business models. In an increasingly competitive market, the ability to leverage the benefits of Tech Data Capital, can keep resellers viable and competitive. To get started or for more information, visit our website. You can also email us, or contact us by phone at (800) 307-4588.
About the Author
Jen Schaeff is Sr. Manager, Global Sales Operations, Tech Data Capital.