Today’s businesses are increasingly reliant on the technology solutions provided by original equipment manufacturers (OEMs) and system integrators to stay competitive. From hardware to software and managed services, the fast-changing landscape offers an increasing array of solutions for businesses.
However, for businesses in emerging markets such as South Africa, accessing these technologies comes with its own set of challenges, including having to purchase products and services that are subject to pricing in hard currency, while earning their revenues in currencies such as the rand.
The recent fluctuations in the currency markets – against a backdrop of rising interest rates designed to curb inflation and the upheavals in the banking sectors of the US and Europe – highlight the difficulties for corporate entities. On the one hand, corporate entities face a higher bill in rand for solutions that are priced in dollars than they did just a few months ago, while on the other, they have to ensure that the solution they are buying will deliver a return on investment required to justify the purchase.
Market-leading OEMs or system integrators should have no difficulty in making a compelling business case, especially on a multi-year contract. Businesses will also understand the medium to long-term benefits that the technology solution can offer. These include improved cash flows, digital transformation, improved customer experience, business processes, and the positive impact on current and new business models.
The problem for corporate entities comes in the form of managing the cash flows of paying for the solution, especially in the early stages of implementation. We have mentioned the problem of exchange rate fluctuations, but there are others to take into account, such as managing around a strict budget cycle.
Against this backdrop, OEMs and system integrators will have their challenges, and the right funding or payment solution can help:
- Improve sales lead times
- Help customers overcome budgetary constraints
- Create opportunities for upselling
- Secure revenues upfront
- Develop flexible payment structures that meet the cash flow requirements of all parties
- Funding of capex related to managed services and/or
- Underwriting counterparty credit risk
Financing partner
This is where working with a bank or finance house that understands the market can add value. From a deep knowledge of the working capital cycle of a business, to access, to risk mitigation tools, a strong financing partner can be the catalyst to match the needs of both the OEM and the end user.
Above all, the bank or finance house can help entrench and build long-term relationships between the OEM or system integrator and customers.
Partnering with a financing house or bank can help OEMs and system integrators who are looking to expand their customer reach by providing innovative payment solutions. Investec’s Technology Asset Finance funding solutions help private and public companies and institutions meet their IT and technology requirements to operate more efficiently.
Through our end-customer focused approach, we provide efficient, turnkey equipment finance solutions tailored to your balance sheet and cash flow requirements, with competitive and predictable repayment terms.
For more information, contact technologyassetfinance@investec.co.za. Customer qualifying minimum net asset value of R100-million.
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- The author, John Plant, is head of technology asset finance at Investec
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