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MB Tech throws resellers a lifeline

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At a time when many IT resellers are going to the wall on a weekly basis, MB Technologies has thrown its channel partners a lifeline with the establishment of South Africa's first "bank for the channel".

Channel Capital, which will be headed by former Tarsus executive Ron Keschner, will offer financial products, services and assistance to the group's resellers.
While the new financial business has been in the planning stages for well over 18 months, Keschner says it is a project that he has envisaged for a lot longer.
"I've been personally thinking about this since Siltek hit the wall [back in 2001] which wasn't only devastating for them, but for the whole industry," Keschner says. "As a group, we've always been keen to bring value-add to our resellers – our Academy, PartneRewards – but what is the real killer app in the channel? It's finance, finance, finance."
Keschner says that while the industry has enjoyed some boom years recently, the pendulum is starting to swing back.
"We're now starting to go back to a crunch period," he says. "There are the interest rate hikes we've just seen, for example, and things are getting very tight out there. The real issue is that the biggest pain faced by resellers today is cash flow.
"They are operating on single-digit margins and, even when they secure a big deal, normal terms to the distributor usually apply – 30-day payment on invoice or statement," he says. "What does he do when his customer is only going to pay him in 72 days? If he doesn't abide by the distributor's terms, he risks falling foul of the insurance houses. We're seeing some of our resellers walk away from big deals simply because of this – they don't want to blacken their name with their suppliers.
"What we're aiming to do with Channel Capital is alleviate this problem," Keschner adds.
While declining to name them, Keschner says Channel Capital is backed by several of South Africa's largest financial institutions and that the funding it has access to is "significant".
"Not only is the timing perfect, but we believe Channel Capital is uniquely positioned to provide assistance to the southern African reseller community for the simple reason that it has been specifically designed by channel players, for channel players," he says. "Channel Capital is the only financial services provider working exclusively through its reseller partners."
More about the company can be found at www.channelcapital.co.za .