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Local channel under threat

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The slowdown in local IT spend and rising interest rates have put so much pressure on South African resellers that their livelihoods are more threatened than ever before.

This is the view of Tarsus Technolgies' CEO, Pierre Spies, who says that the renewed cash-flow pressure resellers are facing is ringing up casualties almost every day.
"The slowdown in the market has meant that on one hand, resellers are making smaller revenues, while rising interest rates on the other hand, has meant that their costs are increasing" Spies says.
He says hard evidence of this lies in the fact that Tarsus' "debtors days" have slipped by as much as 15% since the beginning of the year.
"That essentially means it's taking the company more time to receive payment on sales to resellers than it normally would," Spies says. "A limited number of resellers are able to keep to their agreed-upon terms and some are even finding it challenging to keep their heads above water.
"The liquidation rates in the channel have gone up exponentially in comparison to a year ago," he says. "We see medium-sized customers going out of business on a weekly basis."
While small resellers are making a living out of loyal relationships, larger resellers are making ends meet by leveraging their economies of scale. But even these resellers are feeling the pressure.
"It's clear that something has to give," Spies says, "since this is a problem that threatens the health and longevity of the entire channel."
Spies says that Tarsus has been working on a solution to the current problems faced by resellers, believed to be some form of financing and credit package, but wouldn't be drawn.
"We believe we have found an innovative solution to dealing with our customers' cash-flow challenges," was all he would say. "And resellers should watch this space for more information."