Intelligent Tech Channels Issue 55 | Page 24


Part of the Lynchpin Media team , Manda Banda has more than 20 years of experience working for channel publications . He shares the knowledge he has learnt during that time in this monthly column for Intelligent Tech Channels .

Financial transparency vital when managing credit schemes

Manda Banda , Managing Editor , Intelligent Tech Channels
Manda Banda is also Lynchpin Media ’ s Managing Editor of Intelligent CIO Middle East and Intelligent CIO Africa magazines .
A look at channel credit schemes and why this service remains one of the most contentious and touchy issues in the Middle East and Africa ( MEA ) channel , its impact on reseller businesses , and how vendors and distributors are managing credit schemes and encouraging financial transparency in the partner community .

Given that majority of IT vendors and distributors in the volume and value space in the Middle East and Africa ( MEA ) and other emerging markets in the IT industry extend credit to channel partners or have developed channel financing schemes as a way of mitigating cash flow challenges that resellers face when financing big technology projects , it is imperative that channel partners remain transparent and carry out financial audits to enhance credibility of their businesses .

Over the years the banks ’ appetite for SMB lending especially in the MEA market has drastically reduced and credit insurers have in the process also reduced the credit cover extend to resellers .
That being the case , most resellers do not maintain a formal set of financial records that are regularly audited and the lack of availability of audited financials prevents vendors and distributors that have financing schemes for partners from providing direct credit to the channel .
And while there are a few vendors and distributors that standout and are advocating for a more transparent process when providing credit financing to qualifying resellers across the MEA region , the broader concerted industry effort required to address the challenges that the channel faces is yet to be developed by those that believe credit finance is a vital element of conducting business in the IT industry .
From my perspective , I do believe it ’ s important that a transparent process is put in place for all stakeholders involved in the IT supply chain . Over the last two years channel partners have struggled to access credit facilities provided through distributors because of the business restrictions that were brought about by the COVID-19 pandemic ?
But can the partner community survive without the credit schemes that IT vendors and distributors offer ?
According to global credit insurance firms , the risk of non-payment by companies has not disappeared and caution is in order as the world continues to suffer from subdued growth and trade prospects due to business stagnation from the pandemic . And while things are starting to improve , most resellers are yet to get
Channel credit schemes play a critical role in enabling partners to finance big projects and ease some cashflow issues . into grip with the new normal of working from anywhere . Many are struggling to stay afloat ; others are failing to retain the right skills and talent while most are still feeling the credit squeeze and lack of growth impacting their businesses negatively .
In the Middle East for example , reseller runaways tend to temporarily affect the credit and business sentiment as lenders and distributors lose money . In Africa , lack of stability with foreign exchange makes doing business in many countries across the continent extremely hard as the uncertainty around currency fluctuations can wipe out profits before a reseller even receives the goods or delivers a service .
And while the credit relationship between a vendor and a distributor is straightforward , the same cannot be said between a vendor and reseller or a distributor and a reseller when it comes to accessing credit .
Whatever the situation that ’ s prevailing at the moment , channel credit schemes play a critical role in enabling partners to finance big projects and ease some cashflow issues .
I want to reiterate here that it ’ s impossible for the MEA channel to survive and operate without proper credit schemes in place . That being the case , I believe the trust factor has vanished from the MEA channel and this had a worsened a few years ago in the Dubai market . Another problem at the moment is the shortage of chips that has not only impact hardware sales especially for partners that specialise in custom built systems ( servers , PC and gaming
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