In today’s economic environment its challenging for VARs to be able to secure the access to credit they need to maintain their cash flow and bid on bigger jobs. For the smaller VAR or the partner that’s just starting out, those challenges are magnified.
It’s those challenges that Westcon Group, a Tarrytown, NY-based specialty distributor, is looking to tackle with its Emerging Partner Credit Program by extending credit lines of $10,000 or more to smaller and new partners.
Already launched on a test basis in the U.S. and now being rolled-out across North America, the emerging partner program is designed for resellers with typically less than $2 million in annual revenue, the sorts of partners that have yet to establish a solid credit history and would have difficulty obtaining financing through traditional vehicles.
“We’ve found that a lot of our partners, especially smaller partners that are just starting out or that don’t have large sales numbers, are finding it difficult to get access to credit with distributors,” said Ed Grzelakowski, director of financial services with Westcon North America.
The Westcon program is about more than just financing, says Grzelakowski. It’s designed to have the partner and the distributor work together proactively to grow the partner’s business, and help the partner develop a relationship with Westcon and establish a credit history it can build-on down the road.
“It’s hard to (extend credit) when a partner just brings you an opportunity and you don’t know them well,” said Grzelakowski. “If we can bring them into the family and get to know them early then we can handle those larger opportunities, and be able to connect them with our other credit facilities or third-party providers.”
The emerging partner program isn’t vendor-specific, and is available to all Westcon partners. In the current economic environment the banks are requiring more hoops to be jumped through to obtain financing, but Grzelakowski says the Westcon program is designed to be simple. All that’s required is a basic credit application, certain tax and exemption certificates, and a business check with Dunn and Bradstreet. If all the proper information is submitted, he says approval usually follows within 24 hours.
“We’re willing to put out a basic credit line of $10,000, and from there we’ll build on it,” said Grzelakowski. He adds all partner files are reviewed periodically, and as a VAR becomes a more valued partner not only can the credit line increase, but Weston can also help arrange access to programs such as IBM’s flexible credit program and Nortel’s leasing program.
“I think we have a slight advantage just because of our size,” said Grzelakowski. “I haven’t seen a lot of programs geared towards this side of the market. This lets us show we’re really invested in that market segment.”
While Grzelakowski acknowledges there is a risk to Westcon with the emerging partners program, extending credit to partners when the banks and other financing providers may be leery to do so, he says it’s a risk they’re willing to take.
“We’ve identified it to be one of the risks of the program, but we’re willing to take the risk on this to help our partners,” said Grzelakowski.