Guest Column | May 7, 2015

6 Reasons To Offer Financing To IT Customers

By Tawnya Stone, Director, Enterprise Strategic Technology, Great America

Financing To IT Customers

Regardless of size, IT is a critical component to running a business. However, computers, servers and other IT equipment can get expensive. This often drives businesses to delay replacing hardware in order to reduce operating expenses. Yet, what if they didn’t have to pay for their IT purchases in a single payment upfront?

Financing offers businesses an easier way to get the equipment they need without a huge capital expense.  It removes sticker shock, makes payments more manageable, and allows organizations to refresh hardware to take advantage of new technology and features.  

Let’s look more closely at six ways financing benefits IT solutions providers:

  1. Boost Sales. If a customer doesn’t have to pay $20,000 or $30,000 upfront for a purchase, and can instead pay in monthly installments over three years, the solutions provider has a better chance of closing the deal. Those customers who were putting off a large purchase might decide there is no reason to wait. When a finance agreement is close to term, providers can replace the hardware with a comparable monthly payment. It’s a win-win: The customer gets into a cycle of predictable payments and refreshed equipment while the provider sells more hardware making the support of current technology more efficient.
  2. Bundle Services. By bundling IT services, software and supplies into the hardware sale, providers can better protect their margins without providing line-item costs. This appeals to customers because they receive a single invoice for all IT hardware and services. Since bank loans only finance capital purchases, a single invoice isn’t an option.
  3. Improve Margins. Solutions providers are often competing against big-box retailers when selling hardware, and when customers demand price-matching, profit is minimized. Through financing, the pressure is lessened because there is no upfront lump sum and services can be bundled with equipment.
  4. Protect the Business. Packaging services with hardware makes it harder for competitors to steal a solutions provider’s customer because it’s tougher to compete on price. In addition, tying equipment to services in a contract creates stickiness with the customer. Providing a single point for all IT hardware and services allows solutions providers to become a trusted partner with their customer.
  5. Compete with HaaS, HaaR, SaaS, and Other Cloud Models. One of the benefits of HaaS (Hardware-as-a-Service), HaaR (Hardware-as-a-Rental), SaaS (Software-as-a-Service), and cloud models is the ability for customers to pay for IT needs on a monthly basis instead of upfront, much like financing. As with cloud models, hardware agreements can let businesses enjoy the tax and accounting benefits by transferring capital costs to the operating expenses column.
  6. Offer Seasonal Terms. For solutions providers selling into school districts and other seasonal businesses, payment terms can be set to accommodate their billing cycles. A school district could chose to get billed only during the months that match the school year. This provides flexibility and helps boost the solution provider’s appeal and strengthens customer loyalty.

Financing solves many of the challenges of traditional equipment sales for both the business and the IT solution provider. When IT solution providers don’t offer a financing option to their customers, they could lose deals they could have closed. Make it easier for your customers to acquire the IT equipment they need to run their businesses and consider IT financing.

Tawnya Stone is the director of enterprise strategic technology at Great America. She has more than 10 years of experience driving project management and operational efficiencies, and currently chairs the Managed Print Services Community for CompTIA.