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GE Capital’s Commercial Distribution Finance (CDF) business saw an increase of more than 10 percent in financing volume in the information technology (IT) channel in 2012, and it expects that trend to continue this year. This is, in part, because of wider adoption of manufacturer-approved financing programs that offer inventory working capital within the IT industry, both domestically and internationally, easing cash flow challenges for value-added resellers (VARs), distributors and system integrators.
“The increase in vendor financing coverage supports the dynamic landscape of the high-tech industry,” said Tom Grathwohl, CDF’s senior managing director of global and structured solutions. “As financing options expand from the U.S. and Canada into Latin America, Europe and Asia, particularly China, both industry-leading vendors and emerging innovators will benefit.”
Providing an alternative to vendors’ standard open account terms — which typically require payment in full within 30 days — inventory working capital financing programs allow VARs to manage the cash conversion cycle from inventory procurement to accounts receivable collection. VARs that use inventory working capital financing can also reduce bank borrowing costs. They may even benefit from more efficient billing and collection processes, which help ease their administrative burdens.
As VARs seek technology application expertise and productivity enhancements, mergers and acquisitions (M&A) in the IT industry should continue as a significant trend in 2013.
“We’re seeing competing trends — one toward domestic consolidation and the other toward global expansion,” Grathwohl said. “We’ve supported the technology channel for more than 30 years and we’re looking forward to helping American businesses expand. Throughout GE Capital, we're proud to help our customers put their financing to work so they can achieve smart growth on a global basis.”
To read more about the benefits of working capital financing programs, click here
To listen to an audiocast about short-term accounts receivables (STAR) financing, click here
Technology & business services in GE Capital’s U.S. Mid-Market CFO Survey
In late 2012, GE Capital surveyed the chief financial officers (CFOs) of 500 U.S. middle-market companies across seven distinct industries to ascertain their views on the U.S. economy and their outlook on a variety of important issues, including their expectations for spending on technology and business services.