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  • Views from the flipside
  • How will Brexit affect IT spend and how can finance help?

Views from the flipside

brexit-blogv3.pngAfter the momentous result of the EU referendum, analysts have been busy trying to assess the potential impact on the UK's IT industry. And it doesn't make great reading for IT Suppliers.

According to CRN, all major analysts, with the exception of Forrester, are predicting that the UK IT market will shrink anywhere between 0.3% to a massive 10% in 2016:

Analyst Grow Shrink Prediction Pre-Brexit
Forrester 1% - 5% growth
Gartner - 0.3-3.3% 4.7%-5.3% growth
Canalys - 10% -
IDC - 2% (CAGR) -

Source: CRN

Forrester defend their forecast for two reasons - firstly we are already halfway through 2016 and secondly they believe that large sections of the IT market will remain unaffected.

However, there is still uncertainty as Jeremy Davies, co-founder of Context explained, "We are rudderless at the moment...We probably won't see a tangible effect for a good couple of months, or even into the fourth quarter."

How can offering asset finance help?

Offering a finance solution to your customers can help you combat a number of potential issues that the uncertainty caused by the Brexit vote has created.

Overcome common sales barriers 

By offering an asset 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.

By introducing finance early, many of the financial objections to purchasing can be avoided:

Budget Constraints: A finance solution normally requires a monthly payment on day one and helps to reduce the initial cost outlay from the business.

Cost of Equipment: With a finance partner you can provide a leasing quotation for all or part of the purchase, helping your customer achieve the solution they need within their budget.

Sticking with Old Equipment: A monthly finance payment can enable the purchase, can be tax efficient* and your customer can remove the risk of equipment failure.

Use finance to trigger a purchase

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.

Maintain & Grow Margin

Remove the need for discounting by offering customers equipment finance as a way of paying for your products and equipment. By spreading the cost over an agreed period, you no longer have to discount equipment to secure sales, helping you protect your margins.

The above includes an excerpt from our IT Sector paper, download How Finance can help IT Equipment Suppliers to learn more.

Discover how the LDF Partner Programme can help you reduce your cash conversion cycle, increase sales and protect margins.

Download our IT Sector Paper

*For further information surrounding taxation, please consult your Accountant.

By Ian Cushion
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Views from the flipside

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