Benjamin Rissing has been working for over a year as a Leasing & Financing Specialist in the Credit Service division of Tech Data Deutschland. Benjamin supports partners in all matters relating to financing solutions. You can access Finance Solutions for projects, repeat business and the development of new technology offerings.
Mr. Rissing, what exactly does Tech Data offer partners in the area of Finance Solutions?
Rissing: Honestly, a variety of financing solutions - we have the right solutions for every challenge our partners face! Personally, I focus on lease financing. Leasing is the second-highest used financing method for mobile assets after the traditional loan financing via the local bank.
Why is leasing so popular as a form of financing?
Rissing: There are several reasons. For example, it may be more sensible for tax purposes not to buy the products, but to lease them in order to take advantage of the balance sheet neutrality of the leased assets. I like to ask our partners to talk me through what they are trying to achieve, so that I can explain the different options. In my opinion, the key advantage lies in the different possibilities that a lease offers. In contrast to loan financing, the lessee has all the options of how to proceed with the products after the term.
Could you explain that in more detail?
Rissing: Gladly. If a customer of our partner finances the products, for example, through a classic loan, he is the economic owner of the products right from the start. Similar to a house purchase - gradually the monthly instalments are paid and with the last instalment the loan contract automatically ends. In leasing, on the other hand, the lessor (i.e the leasing company) is the beneficial owner of the leased products and thus has the option of offering the lessee different options at the end of the term. These are: return of the equipment, extension of the contract and further use or a purchase offer or property acquisition. The customer can choose! The channel partner implements it accordingly.
Why should customers choose to return the devices at the end of their term?
That would mean, they pay over several years, then they can’t keep the devices at the end! Sounds kind of unfair ...
Rissing: Correct, sounds unfair at first. However, the trend is that organisations only pay for the use of products. Incidentally, this is not just the case in business. Private users are paying more and more for their pure use, for example with Amazon Prime, carsharing, Netflix, e-scooters, Spotify etc. Especially in our industry the trend is in the same direction. More and more companies understand the advantage not to buy IT hardware, but to lease and return at the end of the term or to exchange for new products. So that way you always work with the latest technologies, which can mean, for example, significant efficiency improvements or faster workflows.
Take, for example, a notebook that is leased and returned after 36 months - the benefits are obvious:
- There are no additional costs for maintenance or repair of old equipment.
- The customer has no storage or disposal costs for old equipment.
- Through regular technology exchange, the customer always uses the latest technology and has the latest warranty.
- As a rule, the customer also has cost advantages over the cash purchase ...
What exactly do you mean by cost advantages over a cash purchase?
Rissing: Often I offer a residual value leasing, with which our partners or their end customers save money compared to a cash purchase. The following is a simplified example:
Product: Wireless Routers
Price: 1,000 €
Quantity: 10 pieces
Alternative A: The company buys it for € 10,000
Alternative B: The company opts for a residual value lease over 24 months including return of equipment after the end of the term
The monthly instalment is 333 euros
The sum of the monthly instalments is therefore 8,000 euros.
Conclusion: The end customer saves € 2,000 compared to a regular purchase. That's really something, right?
For which partners are leasing offers interesting?
Rissing: It is especially interesting for small and medium-sized partners, and their customers. Often, end users cannot afford to buy hardware and / or software at once, so funding is needed. Our partners can also ask for financing in the case of projects or when partners want to get into new technologies. There are a lot of possibilities ... the most important thing is that the partners should simply reach out to us. We are usually guaranteed to find a perfect solution. Just call your account manager or the Finance Solutions team directly.