The unethical e-sale has come to a halt with all the e-selling portals has refused money-back for electronic goods. Also, one the solution side, the cloud is still a distant dream as the numbers has not affected the storage or service business in many of the channel organizations.
Besides this, the latest challenge for the channel fraternity comes in the new and unpredicted form-Financing. Currently there are two ways where any channel partner gets financed- Finance by financial institution and finance by non-financial firms. Banks both private and government-owned will be an example for the former while the funding by distributors, vendors or other channel partner themselves in the process of the billing is a classic example for the latter. The funding from the non-financial agencies in the IT sector has started reducing the money-flow as they, being the part of the industry, knew the hardships faced by the others. However, the financial institutions which were in good terms with the channel fraternity has started crossing horns.
The latest addition in any channel partner’s list of headaches besides filthy competition, unethical e-sale, under-cutting is ‘financing’. Many partners were screaming in social media that IT products were shown doors while applied for a bank loan. Saddest part is some nationalized banks too are not thrilled by the proposals to IT business. Most of the channel partners moan on the reason quoted by the banks- IT products are diminishing and added in not-so-performing sector. The channel also has been given irrelevant responses only for not to provide any financial assistance for the dealers.
However, the issue is different with the private financial sector. The private finance agencies are not rejecting the desired finance requests. However, the interest rates are sky-high which a channel partner cannot afford with the current market conditions. The other face of the challenge from the private sectors is no proper guidelines for providing the financial loans. A leading finance agency which approves loan in one city for an IT dealer is rejecting the same product 30 kilo meter away from the former.
There are still some associations manage to get finance companies sponsor for their regular events. This is a positive sign and shows there is still hope for the channel industry to grab sponsorships from the private finance companies. The IT associations across the country should start immediate focus on this issue with uttermost priority.
“We have had a great FY 16 (Apr to Mar) wherein our biz grew by 40%+ and we have a good outlook for FY 17 as well wherein we have planned to grow @ 35% on Y-o-Y basis.We have received tremendous support from our bankers and other financial institutions which has has supported us in achieving these growths. We have also seen many of our partners getting required support from their banks or financial institutions.”, says Byju Pillai, president, Inflow technologies, a distribution giant in the IT industry. He also said that, in inflow, they have enabled / facilitated many of our partners to get channel financing through third party financial institutions including from banks & NBFC’s. “We have ourselves set up limits to do bill discounting, buyers credit etc to take care of the working capital needs of our business which helps channel partners indirectly. Need of the hour is to ensure that we spend time in the beginning of the order cycle, much before the time of commercially structuring an order to avoid any challenges at a later stage. It is important to be upfront and transparent with our suppliers & bankers so that we could have a collective discussion on commercial structuring of orders. The organisations that has followed these basic principles have had no challenges in getting financial support.”, Byju concluded.