Channel Capital, the finance division of Tarsus Technologies, has announced the launch of its new financial and insurance products.
MD of Channel Capital, Ron Keschner says that worldwide economic downturn has negatively affected the South African IT market, driving many resellers to the edge of business viability, and the majority of the issues being faced are cash-flow and risk related.
"Most of the resellers we work closely with are doing significant business out there, but credit is tighter than ever and customers are paying later than ever before.
"This, in turn, means the resellers might not be able to pay their suppliers on time and that the distributors are left to deal with the crunch – it's a problem that's affecting the entire value chain and something that we believe stands to take a far greater toll over the coming months."
The severity of the situation, says Keschner, is the primary reason his company has designed products around providing effective cash flow relief and loss protection.
Pierre Spies, CEO of Tarsus, adds: "Channel Capital wouldn't add value to the channel if they didn't aim to assist with these concerns. This is the very reason Channel Capital was created in the first place."
To run this new division, Channel Capital has taken on insurance professional James Perris.
Divided into two specific areas of focus, Keschner says the new products give resellers immediate access to cash that's been locked up in their extended debtors book, and the ability to insure their company against losses incurred as a result of customer insolvencies.
"The name for the former of these solutions is CashInjector," Keschner explains, "and as the name suggests it gives resellers the ability to gain access to monies they are owed by their customers.
"For most resellers this will prove to be of great assistance" he says. "Furthermore, the reseller then outsources their complete debtors administration including collections to the professionals contracted to ChannelSure, giving them the freedom to focus on their core business, the provision of IT products and services."
Keschner says the process takes a couple of days and following an assessment of the reseller's debtors book, sees them being paid up to 70% of the monies they are owed on presentation of invoice and proof of delivery.
The balance is then paid across to the reseller (net of costs) as and when monies are recovered on the reseller's behalf. Rates will be formalised up front in a facility letter.
"Because we don't require the reseller to be of a specific size in order to qualify for this product, we see a great deal of the small-to-medium players looking towards using our service as a professional debtors department in perpetuity," he says.
"This is of considerable value to them, since they gain access to their payment immediately and leave the chasing of outstanding debtors to the professionals. This makes sense in the current market conditions."
Looking at the longer-term management of resellers' cashflow and more specifically, protecting them from the losses they can experience as a result of customer insolvency, the second product in this line, CreditSure, is a real breakthrough.
Classically, Keschner says that resellers had to be of a certain size and level of turnover for credit insurance to make financial sense.
"With CreditSure however, the costs are low enough that all resellers can benefit from this vital service," Keschner says.
"We're talking about a premium of just R786.90 per month (and a once-off initiation fee of R410.00 for each client the reseller seeks cover for). Its easily the most affordable product of its kind out there," he enthuses.
Keschner adds that CreditSure gives resellers up to R1-million of coverage against losses incurred from any number of clients per year, but that the liability for each client is limited to R500 000.00.
"This simply means that each client the partner seeks cover for needs to be vetted and listed against the policy and that thereafter, providing they pay the monthly premium of R786.90, they are covered against that client declaring insolvency or being liquidated by a third party.
"We think this is an extremely innovative solution and one that complements our CashInjector product perfectly," he says.
Rounding solutions in the ChannelSure portfolio out, Keschner says the company has done a great deal of work to secure extremely cost-effective short-term insurance rates for resellers and their employees, while tailoring short-term insurance offerings to resellers' exact needs.
"As their names suggest, BusinessSure and PersonalSure help resellers provide coverage for their business and personal lives, while AssetSure is specifically designed to provide coverage for assets on rental-finance.
"Most importantly, the different solutions have been architected to cover aspects specific to the reseller environment, like the transport of goods to clients' premises and liability as a result of data loss or similar unforeseen circumstances.
"I think we have a set of real winners with our new range of products, not only is the timing perfect, but the solutions address some of the most pressing challenges in the IT channel right now.
"The new solutions are available immediately and we look forward to a great response from our reseller base," he adds.