Looking Ahead: How to Pave the Road to Business Recovery

Wayne Super

Businesses around the world today have faced an unprecedented economic disruption due to the COVID-19 pandemic. According to a business continuity survey by Gartner, only 12% of businesses were “highly prepared for the impact of coronavirus,” while less than 2% of businesses believe they can continue as normal.

Rather than reverting to past practices, companies are now addressing the immediate impacts of a global pandemic and positioning themselves for longer-term success by focusing on exposed efficiency gaps.

Remote work wasn’t always the norm, but businesses have adapted to a new way of working that’s here to stay. A report by Clutch reveals two-thirds of employees are still working from home in the United States, and many organizations are planning for this to be long-term or perhaps a permanent change. This certainly presents a systems and data challenge, and is directly affecting processes, workflows, data security and overall company collaboration.

Remaining Competitive

New tools, better data and improved, secure cloud access can help on this front, but this is challenging in today’s environment considering cash flow and liquidity management are critical. So, how can companies still implement the most current technologies to remain competitive? How can resellers help their customers overcome the financial burden of addressing these challenges without sacrificing their own financial health?

Businesses often turn to technology financing programs when they need to make large investments to reimagine the workforce and workplace, but also need to preserve cash. Many smaller businesses aren’t sure where to obtain these flexible solutions. Their own banks are often not able to accommodate them. Additionally, many businesses expect their technology reseller to propose payment programs along with the technology solution. Those that do often win the sale.

Technology Financing Programs

Technology resellers in partnership with a trusted financial services provider can offer cash-constrained customers different payment options. For example, there are payment options structured as a simple and constant payment-over-time, or perhaps customized where payments increase or decrease depending on seasonal revenue fluctuations.

• The benefit to the customer is to 1) accelerate IT project impact on business outcomes; 2) obtain a full technology bundle of hardware, services and software now rather than over time; 3) improve project ROI; 4) preserve cash on hand and working capital credit lines; 5) positively impact cashflow and other KPIs; and 6) enable technology refresh without the need for future large capital outlays.
• The benefit to the reseller is to 1) accelerate bookings and revenue; 2) increase size of transaction by 30%; 3) increase gross margin; 4) receive full payment for the transaction, improving cash flow management; 4) help de-risk business through accelerating receivables to cash conversion; and 5) refresh the sale in three years rather than five-plus years.

On the other hand, what about cash-abundant customers? A typical problem for technology resellers who win large, complex project-based transactions is this type of customer usually must buy products, services, and software upfront, and they then make payments upon completion of key project milestones or when the project is 100% complete. A reseller recoups their investment plus margin over a six- to 18-month time frame. This situation puts a lot of negative pressure on a reseller’s cashflow and margin, and only benefits the customer. This challenge can be solved with project financing.

Project Financing

Project financing enables the reseller to successfully manage cash flow and de-risk the business while simultaneously providing its customer a full project deployment with success milestones. The reseller will receive upfront 100% of the project proceeds from the financial services provider. Then, the reseller will commence deploying the project and assign customer milestone payments to the financial services provider. Additionally, the financial services provider builds in allowances for project delays and change orders.

Supporting business recovery and growth has never been more important given the current environment has been redefined by lockdowns worldwide, shelter-in-place orders, more remote work and emphasis on digital transactions. These transformations provide a glimpse of what we expect in 2021 and beyond. It is paramount that technology resellers and financial services providers collaborate to help businesses identify opportunities and practical ways to invest in longer-term solutions.

A trusted financial services provider with knowledge and technical expertise aligning with your interests and your customer’s needs is a key driver to winning the sale. We are working together for a more inclusive future where the primary objectives are recovery, growth and prosperity.

Wayne Super is a member of Cisco Capital‘s senior executive team, serving as managing director of Global Capital Markets. He oversees a department responsible for $30 billion of indirect annual originations through Cisco Capital’s financial services ecosystem, as well as focusing on financial-technology (Fintech) business model innovation. His previous roles at Cisco Capital include serving as chief financial officer, chief risk officer and director of venture financing. You may follow him on LinkedIn or @Cisco on Twitter.