GE Capital Sees Growing Use of Inventory Working Capital Financing by Tech Firms in 2013
Channel cash flow challenges may also drive more M&A
CHICAGO--(BUSINESS WIRE)-- GE Capital's Commercial Distribution Finance (CDF) business saw an increase of more than 10 percent in financing volume in the information technology (IT) channel in 2012, and it expects that trend to continue this year. This is, in part, because of wider adoption of manufacturer-approved financing programs that offer inventory working capital within the IT industry, both domestically and internationally, easing cash flow challenges for value-added resellers (VARs), distributors and system integrators.
"The increase in vendor financing coverage supports the dynamic landscape of the high-tech industry," said Tom Grathwohl, CDF's senior managing director of global and structured solutions. "As financing options expand from the U.S. and Canada into Latin America, Europe and Asia, particularly China, both industry-leading vendors and emerging innovators will benefit."
Providing an alternative to vendors' standard open account terms — which typically require payment in full within 30 days — inventory working capital financing programs allow VARs to manage the cash conversion cycle from inventory procurement to accounts receivable collection. VARs that use inventory working capital financing can also reduce bank borrowing costs. They may even benefit from more efficient billing and collection processes, which help ease their administrative burdens.
As VARs seek technology application expertise and productivity enhancements, mergers and acquisitions (M&A) in the IT industry should continue as a significant trend in 2013.
"We're seeing competing trends — one toward domestic consolidation and the other toward global expansion," Grathwohl said. "We've supported the technology channel for more than 30 years and we're looking forward to helping American businesses expand. Throughout GE Capital, we're proud to help our customers put their financing to work so they can achieve smart growth on a global basis."
To read more about the benefits of working capital financing programs, click here http://www.americas.gecapital.com/home.
To listen to an audiocast about short-term accounts receivables (STAR) financing, click here https://www.facebook.com/GECDF.
Technology & business services in GE Capital's U.S. Mid-Market CFO Survey
In late 2012, GE Capital surveyed the chief financial officers (CFOs) of 500 U.S. middle-market companies across seven distinct industries to ascertain their views on the U.S. economy and their outlook on a variety of important issues, including their expectations for spending on technology and business services.
Among those CFOs surveyed, 42 percent said they expect their corporate IT spending budgets to increase this year. Forty-nine percent expect their budgets to remain the same. The industries most likely to increase IT spending are generally in the manufacturing and healthcare spaces.
When asked how the advent of cloud computing has impacted them, 46 percent of respondents said it had impacted their internal IT strategy, while 23 percent said it had impacted their marketing strategy.
In light of cloud computing, 77 percent said they see their company's software expenditures increasing; 73 percent said they see their IT services expenditures increasing. More than half (57 percent) said they see hardware expenditures increasing.
When asked what phase of the corporate IT spending cycle they're in, 35 percent said the early phase and 33 percent said they were in the middle of the cycle.
For more information, go to http://www.gecapital.com/cfo-survey.
About GE Capital, Commercial Distribution Finance
GE Capital, Commercial Distribution Finance provided nearly $31 billion in financing for more than 40,000 manufacturers, dealers and distributors across North America in 2012. Programs include inventory and accounts receivable financing, asset-based lending, private label financing, collateral management and related financial products. Customers have access to exclusive online tools and analytics to manage their accounts and inventory. For more information, visit http://www.gecdf.com/ or follow company news via Twitter (@GEInventoryFin).
GE Capital offers consumers and businesses around the globe an array of financial products and services. For more information, visit www.gecapital.com or follow company news via Twitter (@GECapital).
GE (NYS: GE) works on things that matter. The best people and the best technologies taking on the toughest challenges. Finding solutions in energy, health and home, transportation and finance. Building, powering, moving and curing the world. Not just imagining. Doing. GE works. For more information, visit the company's website at www.ge.com.
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GE Capital, Americas
Lisa Tibbitts, 203-956-4582
KEYWORDS: United States North America Connecticut Illinois
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