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Key Ingredients for Success. Scott Tillesen Vice President, Credit and Customer Care – The Americas Todd Jordan GE Capital Finance. Electronic Resources at Tech Data. www.techdata.com On-line invoice inquiry On-line customer statements www.techdata.com/TDDirectPay

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key ingredients for success

Key Ingredients for Success

Scott Tillesen

Vice President, Credit and Customer Care – The Americas

Todd Jordan

GE Capital Finance

electronic resources at tech data
Electronic Resources at Tech Data

www.techdata.com

  • On-line invoice inquiry
  • On-line customer statements

www.techdata.com/TDDirectPay

  • Internet Bill Presentation and Payment System

www.techdata.com/credit

  • Financing solutions and options
slide3

Key Ingredients for Success:

Creditor Relationships

Financing Alternatives

Cash Flow Forecasting and Management

creditor relationships
Creditor Relationships
  • Profit – Especially profit retained in the business
  • Owners Investment – Skin in the Game
  • Have a Forward Looking Plan
  • Utilize Appropriate Financing Options
  • Good References – Bank and Trade
  • Working Capital Management
  • Provide Security
  • Timely and Full Communication
timely and full communication
Timely and Full Communication
  • Share Information:
    • Mergers & Acquisitions, New Vertical Markets, Staffing Changes, New Locations
  • Experience and Education of Owners / Operators
  • Use Email
  • Use Website
  • Bad News is Better than No News
financing alternatives
Financing Alternatives

As revenue grows there will be more assets such as inventory, accounts receivable, and equipment.

Resellers need to plan how additional assets will be financed.

There are three general sources of business financing that need to be considered:

Suppliers: Credit limits and end-user payment alternatives

Banks/Finance Companies: Inventory financing and end-user financing

Shareholders: Personal guarantees and equity infusion

financing sources pie chart
Financing Sources Pie Chart

While there is no magic formula to say exactly in what proportion each source of financing should be, what is known is that successful companies need all three sources to grow.

credit limits from suppliers
Credit Limits from Suppliers
  • Maximize Credit Limits with Terms by:
    • Sharing Financial Statements
    • Having good industry payment record
    • Not having any reported liens, suits, or judgments
    • Disclosing education and experience of owners and operators
    • Providing a personal guaranty or security interest
    • Providing a Stand By Letter of Credit (“SLOC”)
    • Communication
standby letters of credit explained
Standby Letters of Credit Explained
  • Visit your bank and ask for SLOC in favor of Tech Data.
  • Specific dollar amount and time period.
  • Tech Data will provide you with the words needed on the document.
  • Provide the finished document to Tech Data.
  • Stands as secondary support for payment.
  • More cost effective than a bank loan.
end user payment alternative
End User Payment Alternative
  • Assign your accounts receivable to Tech Data via an Assignment of Proceeds (“AOP”).
  • Tech Data provides the required wording for Reseller to put on their letterhead.
  • Reseller signs the document as does the end-user.
  • Provides end-user agreement to pay Tech Data directly.
  • Great alternative for a specific large transactions or on an ongoing basis.
  • Subject to the end-user being credit qualified.
bank line financing
Bank Line Financing
  • Needed to meet overhead obligations.
  • Sometimes needed to close the gap between accounts payable and accounts receivable.
  • Keeps creditor happy at a minimal expense.
  • Is used by every Fortune 500 company.
  • Financing from Tech Data’s financial partners has advantages.
inventory financing thru tech data financial partners
Inventory Financing Thru Tech Data Financial Partners
  • Reseller applies and obtains a credit line with a Tech Data finance partner.
  • Reseller places order as usual with Tech Data.
  • Tech Data obtains electronic authorization from the finance partner and ships the order.
  • Finance partner pays Tech Data.
  • Reseller pays the finance partner.
  • Oh yes, this financing is FREE.
financing thru tech data financial partners
Financing thru Tech Data Financial Partners
  • Can be used in addition to your Tech Data open account.
  • Free financing supported by Tech Data and certain product manufacturers. - 30 to 60 day terms in most cases
  • Tech Data Financing Company Partners:
    • GE Computer Distribution Finance, Castle Pines Capital, De Lage Landen, and IBM Global Finance
slide17

GE Capital Solutions - Commercial Distribution Finance

GE Capital Solutions provides Working Capital and Inventory

Financing to support the movement of products through the Technology, Security Electronics and Appliance supply chain

Our Heritage…

For over 50 years, Capital Solutions through its Commercial Distribution Finance unit has partnered with companies across all industry segments, supporting the business to business channel. Today, CDF manages sales volumes approaching $60 Billion annually.

Enabling Clients to…

CDF Custom Solutions…

  • Inventory Finance
  • Asset Based Working Capital Solutions
  • Purchase Order Financing (S.T.A.R.)
  • International Trade Finance
  • Expand market reach, increase sales
  • Manage sales opportunities through innovative programs partnered with industry leading vendors
  • Accelerate cash conversion cycles, expand DPO
  • Minimize liquidity risk

A Few of our Partners…

cdf channel finance solutions
CDF Channel Finance Solutions

Providing innovative solutions to support the entire market channel, accelerate cash-conversion cycles, drive sales growth, and reduce associated risk and administrative cost

Working Capital Solutions

Inventory Financing

International Trade Financing

Purchase Order Financing

Motivate distributors to stock deeper, provide terms to resellers

Extended terms facilitating product movement through distribution channels

Financing of large purchase orders

Establish Obligor specific financing terms to relieve capital impact of large contract orders

Financing over the water…

Importer terms supported by exporters, providing inventory for growth and seasonal demands

  • Maximize cash-flow for growth…

Secured lending to Distributors and VARs to supplement operating capital requirements

  • S.T.A.R. – Receivables Fin.
  • Branded – transparent to customer, support reseller opportunities
  • A/R Purchase
  • Asset Based Financing
  • No LOC or Advance Pay requirement
  • Reduce administrative cost
  • Direct Structures
  • Indirect through multi-tier distribution

Sales Channel Finance

Revolving Lines

Sales Solutions

Import Services

slide19
$9.1 billion Global Financing Cisco FY 2008

North America, Europe, MEA/CEE, Japan, and Asia

684 US Partners using program

60 days interest free terms and bank type working capital solutions

Promotional 90 day terms for Cisco Select partners launched 12/15/2008

12 years of Cisco and Tech Data / GE finance relationship

GE on-site representation at Cisco in San Jose and Tech Data Clearwater Campus

Cisco and GE Capital Solutions

partner financing options increasing purchasing power
Partner Financing OptionsIncreasing Purchasing Power

$1.5MM Credit Line

Financial Review Secondary Secured

XL Program

$500K

Web Application Credit Scoring Financial Review

Plus Line

$250K

SMB Line

Web Application Credit Scoring

$25K

slide21

General Application Requirements

Qualifying for a credit line with GE CDF

  • Minimum 1 Year in Business
  • D&B Credit Score of at least 42
  • Positive Tangible Net Worth
  • Qualifying Personal Credit Score
  • Annual Product Revenue of at least $250K.
  • Re-Tax Profit for the last 2 years

Application Process

After Credit Approval

  • Online application: www.techdata.com/GEFinancing
  • Filed Stamped Copy of the Articles of Incorporation
  • Last 2 Fiscal Year-end Financial Statements.
  • 24 to 48 Hour Credit Approvals

**Requirements vary dependent upon the size of credit line requested.

  • Streamlined Account Management through our Online Tools
  • Automatic Order Approvals via EDI
  • Dedicated Account Manager
  • Generous Credit Capacity
  • Extended Terms
contacts
Contacts

Todd Jordan

Tech Data Relationship Manager

GE Capital Solutions Finance

P: 800-237-8931 * 75697

C: 727-480-5143

E: todd.jordan@ge.com

Dedicated GE support to help drive sales growth and support customer needs

  • Take advantage of the immediate ability to drive sales through:
    • Reduced Credit Risk
    • Maintain DSO
    • Extended Terms Financing
  • Increased Sales
  • Credit Capacity
  • STAR PO Financing
end user lease financing
End User Lease Financing
  • Reseller identifies end-user to leasing company.
  • Leasing company approves and documents the deal.
  • Leasing company pays reseller.
  • Tech Data can also be paid directly by the leasing company.
  • Tech Data Leasing Partners:
    • IBM Global Finance, HP Financial Services, CIT, and others with prior approval.
personal guaranty
Personal Guaranty
  • Business owners and officers can provide their personal guaranty of the obligations of their business.
  • Can usually help support an incremental increase in the amount of credit being offered.
  • Guarantor can rescind the guaranty at any time.
  • An appropriate alternative to consider.
a case for equity infusion
A Case for Equity Infusion
  • Vendors compare the size of their investment to yours.
  • They like to see that you have “skin in the game”.
  • Credit managers like to see profits retained in the business.
  • Quantify sources of additional shareholder investment.
  • Every Fortune 500 company sought outside investors to enable their growth.
cash flow
Cash Flow
  • Forecasted
  • Manage The Timing
    • Outflow Later
    • Inflow Sooner
  • Manage The Amount
    • Less Outflow
    • More Inflow
forecasting cash flow
Forecasting Cash Flow
  • Identify The Amount and Source of Cash
  • Plan The Amount and Use of Cash
  • For operating purposes forecast the next 13 weeks.
  • Forecast in Time Increments According to Your Primary Outflows (Use) of Cash
  • Failure to forecast properly can be very bad.
manage the timing of cash flow
Manage the Timing of Cash Flow
  • Outflows Later
    • Accounts Payable Terms
  • Inflows Sooner
    • Accounts Receivable Terms and Practice
accounts payable practice improvement
Accounts Payable Practice Improvement
  • Know your suppliers process and be sure they know yours.
  • Determine in advance what options are offered.
  • Negotiate mutually agreed terms.
accounts receivable practice improvement
Accounts Receivable Practice Improvement
  • Strong Credit Application
  • Clear Understanding of Terms of Sale
  • Analyze Your Customer
  • Consistent Collection Process
manage the amount of cash flow
Manage the Amount of Cash Flow
  • Less Outflow
    • Operating Expenses
    • Capital Equipment
  • More Inflow
    • Added Billable Services
slide35

Summary

  • Creditor Relationships
  • Supplier Financing
  • Bank / Finance Company Financing
  • Owners / Equity Financing
  • Cash Flow Forecasting
  • Managing the Timing of Cash Flow
  • Managing the Amount of Cash Flow
slide36

Scott Tillesen

Vice President, Credit and Customer Care – The Americas

Tech Data Corporation

5350 Tech Data Drive

Mail Stop #A3-18

Clearwater, Florida 33760

USA

Scott.Tillesen@techdata.com

Direct phone: 727-538-5880

www.techdata.com/credit

The Difference In Distribution