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  • Views from the flipside
  • The benefits of offering finance for IT Suppliers

Views from the flipside

keyboard-460.pngResearching options for finance as part of the purchasing process has become the ‘new normal’ for consumers.

Making the inclusion of an asset finance (also known as equipment finance) offering is much more than a nice to have; it is an essential value-add, especially if your competitors are already offering this solution.

IT Finance is an excellent enabler for businesses. It can increase the average transaction value, as customers are much more likely to increase the level of investment when there is an option to spread the cost, often spending up to three times the amount of those not purchasing using finance. Not only that, finance can help IT Suppliers overcome the market challenges they face today.

IT Budgets to stay the same as 2015 in 2016

According to Spiceworks’ “The 2016 State of IT – Managing the money monsters for the coming year”, IT budgets in the EMEA are expected to drop slightly from 2015 levels:

Planned spending on ITSource: Spiceworks

Furthermore, 11% of companies expect their budgets to fall with 40% expecting budgets to remain the same:

Total IT Budget Expected Change
Source: Spiceworks

By offering an IT Finance option as an alternative payment method, you can overcome common barriers to sale such as a lack of budget. Presenting a monthly finance option is more palatable to your customers than a large upfront payment.

Through introducing technology finance early, many of the financial objections to purchasing can be avoided; here are some objections that finance will help to overcome:

Overcome Budget Constraints, Cost of Equipment and Sticking with Old equipment objections

Decline in spend on Hardware and Software

The latest forecasts for 2016 show that spend on hardware and software projects will decline in 2016 compared to 2015:

Decline in spend on Hardware and SoftwareSource: Spiceworks

In the IT sector, the promotion of a finance offering plays a huge part in driving sales, as purchasing takes place at regular, often cyclical intervals.

This is often a costly day-one outlay that enjoys a typical life cycle of 3 to 5 years. Financing the economic life of the asset therefore makes sense as a means to realise a purchase of new equipment, especially for capital expenditures such as Hardware.

Giving a business the option to pay in fixed monthly instalments is a major advantage in the current equipment market place. The need for Suppliers to differentiate their offering against the competition is now a vital consideration.

This is an excerpt from our IT Sector paper, download "How Finance can help IT Equipment Suppliers" to learn more.

If you want to offer an IT Finance solution, discover how the LDF Partner Programme can help you reduce your cash conversion cycle, increase sales and protect margins.

Download our IT Sector Paper

By Ian Cushion
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