Valerie Potapova - Fotolia
It’s interesting to see that Ingram Micro and Tech Data have increased their credit limits for SME customers in recent weeks. Ingram Micro has just raised credit limits and extended terms for over 1,500 SME customers while Tech Data made an additional £150m of credit available in June to more than 4,000 resellers.
Ingram Micro’s finance director, Tony McMurray, said the distributor was demonstrating its commitment to SMBs and their “sustained growth and continued success” by granting and extending credit terms to them.
In Tech Data’s case, the distributor claims its decision helped increase SMB sales by 20% year on year in June. Director of SMB and public sector, Cathi Low said “a very large proportion” of resellers had “made use of the additional credit available. It's clearly making it easier for them to do business and fuelling significant growth for the channel”.
The timing for both distributors is opportune when uncertainty surrounds the UK’s economic outlook in the wake of the vote to leave the EU on 23 June. Obviously, making more credit available is a welcome development at any time but it is especially so at the moment.
The threat of price increases as sterling continues to lose its value against the dollar (we’ve already had a few vendors putting prices up), is likely to prompt some customers to make purchases sooner rather than later. After all, who wouldn’t buy something they need today with credit if they could when the alternative of waiting a few months would mean paying extra for it? Especially if the price increase brought about by sterling’s depreciation in the next few months dwarfed the cost of the credit today.
Indeed, assuming the credit can be provided at a low enough cost, it could spur customers to buy kit now to help escape the effects of future price rises. If sterling’s trajectory against the dollar is likely to be downwards for months to come, with inevitable price increases along the way, any additional credit is likely to be very well regarded by SME customers as a means of helping them beat the price rises.
If they want to try and ensure a smooth landing over the next six months to a year, it is in vendors’ interests to support distributors to extend credit to customers. While it’s true an unstable but falling currency could prompt customers, irrespective of credit availability, to buy now because the product could be more expensive tomorrow, it’s also true that it could deter them from making as many technology investments as they would have done if Brexit had never happened.
With Theresa May recently acknowledging the UK government had no intention of starting the break-up process with the EU and invoking Article 50 until next year, uncertainty over the UK’s future has merely been extended rather than assuaged. It’s to their credit that distributors are doing their part to try and help stabilise the market for smaller customers in these uncertain times.