Leasing proved to be an effective solution for dealers and their cash-strapped customers during 2009. And as the economic climate continues to blow a chilly wind, 2010 could be the year that the majority of comms dealers finally warm to the idea of leasing as a viable option.

Leasing has become the missing link in helping resellers unlock sales potential which would otherwise be lost by the continued lack of credit, according to Nimans' Leasing Director, Lee Williams. He says Nimans and Rocom resellers are taking advantage of a dedicated leasing service to help their customers overcome the credit crunch and any lack of cashflow. A specialist team works across both brands, making decisions in less than four hours, with a conversion rate up to three times higher than the industry norm, he claims. "Leasing has become one of the most effective solutions for dealers in a slowing business world where capital reserves and the availability of credit have dried up," said Williams. "Leasing can help a dealer remove the biggest obstacles to a sale... a customer not having available cash to buy equipment outright or having the credit in place."

Williams pointed out that standard leasing terms are normally three or five years, with a minimum agreement over £1,000. The service covers everything from telephone systems, demo suites and general office equipment through to full office refits. Williams added: "Leasing helps a dealer win more business, provides a simplified single price structure and offers upgrade opportunities further down the line. It is no surprise that as the economic world continues to struggle, this quick and easy service is becoming increasingly popular as leasing provides a viable solution for dealers."

The credit crunch has affected dealers on two fronts, observes Williams. "In a lot of cases their own credit facilities have dried-up as many of the big finance houses that traditionally supported telecoms have now moved out of the market," he commented. "Also, they have had to tighten up in view of the global slowdown, so proposals are not getting accepted in the same volumes. This is combined with a general shortage of capital in the channel from their own customers. So even where dealers have found opportunities, because of a lack of finance options they have not been able to complete a sale."

In a bid to boost the popularity of finance and leasing both Nimans and Rocom have raised credit limits for resellers, so that deals managed by their leasing team do not impact on standard credit terms. Williams noted: "This has in effect doubled the credit limit, allowing resellers to work much more freely so that they can capitalise on many more opportunities. This has been very successful. Resellers have been able to trade even if they have been getting up to their standard credit limits. Another important factor to consider is that leasing creates less customer emphasis on price which means less discounting for resellers. They can also cross-sell and build in more products as part of one all embracing monthly payment scheme."

Credit is King. Leasing eases the big cash outlay burden, and by working with the channel to provide lines of credit for its customers, CSI Leasing claims to go a long way towards offering up-to-the-minute financial information for their pipeline, giving resellers the confidence to concentrate on those end users who are credit cleared. But despite the attraction of zero per cent financing deals, they are not the ‘be all and end all', claims the firm. "It's a good headline to have, but in reality it is not that important," believes Chris Lloyd, UK Sales Manager. "The ability to write well constructed deals that answer specific requirements is more important. For instance, an end user may have a requirement to have their lease costs to coincide with peaks and troughs in their income streams."

CSI is offering pre-screening of resellers' pipelines free of charge. "This is a vital part of running a business these days - knowing the customer is good for the cost of a proposal, even if at the final stage they decide to pay cash. This puts that reseller ahead of the rest," added Lloyd. "It also enables the reseller to make a value judgement on their customers. For example, if a credit is poor and not suitable for leasing, the reseller could then look at their credit terms for that customer and maybe ask for an up-front payment. Or they could decide to not waste time chasing business which will never get placed. At least they have the information."

CSI claims that its SmartTrack lease programme is an easy way to manage the assets a customer has decided to lease. It separates leased and non-leased assets so that they can immediately identify all assets on lease. "This information is then uploaded to MyCSI, our online asset database," added Lloyd. "Each end user will have a login and password, and the data can be easily exported to Excel."

2010 will be less difficult than 2009, believes Lloyd, but credit will continue to be an issue. "Comms is an ideal place to be in terms of leasing because spreading the cost of projects should be Number One in an FD's mindset. And because there has been a slowdown in investment of comms over the last two years, 2010 should see some resurgence in this sector."

His advice to resellers who do not have a leasing strategy is simply... ‘Get one!'. In the current economic climate it is vital for resellers to look at providing a finance proposal as the lead-in to customers. It works, they get positive cash flow and their sales cycles close quicker."

Leasing can help sales people offer an integrated sales approach, considering the end user's technical needs and their financial constraints. According to Lloyd, this is the key driver for leasing to succeed. "A lease gives the end user a fully priced project and can include consultancy and other non hardware," he said. "It is a more disciplined approach too - the lessee (end user) has a clearly defined, flat cost path for the duration of the lease and it takes away ad-hoc purchases. If done correctly, a properly designed leasing programme can become the vehicle of choice when proposing complex deals. When sales people see the success of leasing they wonder why on earth they have never used it before."

The quickest way to lose a lease proposal is for the reseller to ‘sell' it, warns Lloyd. "This is a different sale to what resellers may be used to, and it should always be carried out in partnership with a leasing professional. That leasing professional should be involved in the initial discussions with the reseller, and at the very least should have credit cleared the end user."

Without this early involvement a proposal can very quickly fail, he believes, particularly if that reseller sales person is competing with a reseller who uses leasing correctly. Chris Barrow, Product Marketing Manager, Avaya EMEA, says cashflow is the number one concern for many companies, and this is no different for distributors and business partners. "We understand the challenges facing the indirect channel, and in the face of recession they need solutions that help them to increase cashflow and free up their credit lines," said Barrow. "We believe that our zero per cent finance deals have helped to strengthen our relationships with our partner network."

In early 2009, Avaya launched its Advanced Funding Programme (AFP) to increase cashflow and free up channel business partner credit lines. The vendor also extended its zero per cent finance offers to provide additional support to partners following strong demand for flexible financing. "Feedback from partners is that our financing schemes have been successful," added Barrow. "At the moment we're feeling cautious but optimistic about 2010. Businesses will always be on the lookout for good deals and Avaya's finance offer affords businesses the opportunity to spread costs and risks. This is not only an attractive proposition for our customers, but also a useful tool for our channel partners to secure business, especially in the current economic climate."

In a recession it's especially important for resellers to understand that they're not only selling solutions to the CIO, but also to the CFO. "Our customers want solutions that solve real business problems and drive customer loyalty, but they also want affordable solutions that deliver an almost immediate RoI," stated Barrow. "Leasing solutions, or deals where customers can spread payments over one or two years, give CIO's the technology they want while giving the CFO the reduced capex they want. It works well."

Avaya's zero per cent finance deals give resellers the opportunity to up their sales capacity by removing the financial constraints associated with an implementation. What's more, says Barrow, this financial flexibility means they can afford to provide the technical support that is critical throughout the implementation. "The customer also benefits by gaining immediate access to the technologies that their business needs and not what their budget dictates, allowing them to gain and maintain competitive edge in difficult times," added Barrow. "They can also reap the rewards while they are enjoying the business benefits the solutions provide, which is much less daunting than having to justify a hefty capital outlay during uncertain times."

The lack of credit in the channel has been a feature of 2009 for ShoreTel with finance proposal acceptances not at previous levels. "We have had to work with both our finance and channel partners to ensure we are supporting all deals, and this has seen acceptances at around 77 per cent for ShoreTel solutions," said Tom Perry, Director of Marketing EMEA, ShoreTel. "We have had to become more competitive over the last 12 months, and have heavily marketed zero per cent finance options, improved managed service terms, and taken a long look at the level of services we can push through a financed deal. All of this has been positively received. We are now finding that the finance solutions we offer are often better than those that our channels are able to negotiate because we are managing a serious level of volume via this route."

ShoreTel has been working with CHG Meridian, its EMEA finance partner, to come up with new initiatives due for launch early this year. These will be around beating zero per cent finance deals. The vendor has also been working on the services splits that are available to channel partners. Perry also said that he believes the recovery will be slower than many people expect. "However, our pipeline has stood up well in the past year and we will concentrate in the early part of 2010 on pushing opportunities through to a decision a lot more," he added. "I think our consideration rate as a disruptive technology in our space will continue to grow quickly, so we are predicting increased revenues throughout 2010 in EMEA."

His advice to resellers who do not have a leasing strategy... "Get one as soon as you can and work across your vendor portfolio to ensure you can have multiple equipment types in a leasing deal," urged Perry. "The real key here is getting acceptance from sales communities that leasing and finance solutions are a way of increasing sales and revenue. They should always be presented to a customer. I don't see a downside as long as you can manage this slight cultural shift."

Leasing can also help sales people offer an integrated sales approach, considering the end user's technical needs and their financial constraints. "Finance solutions are a way around these technical and financial constraints," noted Perry. "If we have learnt anything over the last 12 months as a vendor, it is that we must always offer innovative financial solutions and assist our channel to do the same. Vendors that lead this activity for their channels stand a far higher chance of 2010 being a recovery year."