Let vendors lubricate your business

Small businesses may be finding it harder and harder to borrow money, but IT vendors could offer a solution to free up cash and credit.

22nd December 2008 at 2:54 pm

I visited two small businesses last week and each had a tale of woe. The first told me that his bank had whacked an additional four percent on top of his base-rate-tracking overdraft facility. He argued, lost, and moved his business elsewhere.Another had been promised funding on the grounds that her business was seen as likely to ride out the storm. This was two months ago. She went back to take up the offer to be told that “circumstances had changed.” In short, the bank had got the willies.

Now these two can’t be alone. Both have fundamentally decent businesses. And they’ve both ridden out previous recessions successfully. But if they want to do anything to improve their performance, they’re going to have to dig deep into their personal resources. Unless they can find another source of finance.

Looking around, who’s sitting on shedloads of cash? Successful IT vendors, that’s who. And if you want to improve your business efficiency and top line stuff, what might you invest in? Software and hardware perhaps? Chosen carefully, a system that improves your sales and marketing efforts, for example, could help you find those elusive customers and buck the current economic trends.

Rather a convenient little picture is emerging. No-one knows the potential of IT nor, in the case of hardware, does anyone know residual values better than IT vendors. And, if customers are having a job securing finance, the vendors could be looking at a chilly few months or years. Doesn’t it make sense for them to use their money stashes to lubricate the purchasing wheels of potential customers? It helps them and the customers and the rates are likely to be low because they are better able than bankers and financiers to assess the downside.

“Ah”, I hear you say, “but they’ll only lend it to people who are buying their products.” Turns out that this isn’t entirely true. Some vendors have financial arms – Microsoft and Hewlett Packard spring to mind – and they are willing to finance projects – a mix of hardware, software and services. And it doesn’t all have to come from them. Although you’d be mad not to enlist approved partners to maximise your chance of securing a loan.

Taking the Microsoft example, it does expect to supply at least part of the solution. It uses third parties to determine credit-worthiness and to facilitate the loans. It offers terms between 24 and 60 months, based on the customer’s budget and fixed interest rates. Loans can start as low as £1,000. And you can get your Microsoft authorised supplier to start the ball rolling. Or start at the Microsoft finance site.

If nothing else, such an arrangement helps you preserve cash and credit lines (assuming you have any left) for other purposes.


David Tebbutt is an award-winning columnist and feature writer who specialises on the subject of using software and technology to increase business productivity. He's an analyst with Freeform Dynamics but, in previous lives, wrote for Director magazine, Real Business and was also editor of Personal Computer World. http://freeformdynamics.com

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  1. Martyn says:

    But why pay for anything when there is usually a Free and Open Source Software (FOSS) solution?

    Then you can use old that “redundant” hardware that you have lying around – Linux tends to run on lower spec hardware than Windows, as we know.

    There’s nothing as cheap as Free 😀 and there’s no lock-in. If you outgrow the solution in two years, replace it. Since it cost nothing then there’s no problem.


  2. Except you need to know what you’re doing/pay someone who knows what they’re doing. Etc.

    Free usually isn’t, although I agree that it could work out for some folk. Especially those who don’t put a value on their ‘tinkering’ time.

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