Skeptical about IT channel finance? 4 reasons to reconsider

By Claudio R. Cury, Managing Director, Wells Fargo

In the IT ecosystem, channel finance can be a touchy topic. 

Often, it pits distributors, resellers, and even go-to-market (GTM) leaders on one side, and finance leaders at OEMs and software makers on the other. One group sees the potential for increased sales through extended terms; the other worries about margin contraction and maintaining balance sheet metrics.

In reality, there’s a middle ground that can benefit all parties. 

Today’s flexible channel finance solutions can bridge the divide—and the cash flow gaps—that too often hamper growth for IT companies. They’re a “win win” opportunity to drive market share by enhancing relationships, accelerating sales, and using cash wisely. 

4 ways to leverage channel finance right now

If you’re skeptical about the advantages of IT channel finance, these four scenarios are worth another look. The right bank can help you achieve one or more of these goals: 

1. Strengthen channel relationships. With the rise of managed services, consulting, and other “add on” sales, there are more ways to measure success in the channel than the initial purchase of hardware or software.
   
   A channel finance program can help your valued resellers, distributors, and system integrators get traction with customers who many need extended terms, then deliver additional solutions that drive greater lifetime value and loyalty. 
2. Reduce uncertainty and risk. From global competition to dynamic interest rates to the potential impact of tariffs, the IT sector faces a number of challenges. Unpredictable cash flow doesn’t need to be a risk factor as well.
   
   With channel finance, OEMs and channel partners can all manage cash flow more strategically and with less stress. Channel partners and the in-house GTM team appreciate extended terms that spur sales; CFOs and treasury management leaders gain more control of payment timing, stronger forecasts, and more flexibility with cash flow.
   
   Working with a bank like Wells Fargo with a sizable balance sheet brings even more peace-of-mind for OEMs and software companies. The right financial institution behind the scenes of a channel finance program can help companies transfer some of their credit risk, reduce their exposure, and concentrate management of funds. This is an especially important benefit as resellers and vendors grow. 
3. Penetrate untapped markets. Is your product selling well in all possible verticals? It can be difficult for OEMs that rely on open account financing to compete in some sectors; healthcare and government, for example are notorious for lengthy payment cycles that can drag down the balance sheet.
   
   A channel finance program can help you overcome those hurdles and compete effectively in new markets. Channel finance through a bank with an established global network can also facilitate international expansion.
4. Free up cash for strategic initiatives. Analysts expect merger and acquisition (M&A) activity to gain momentum in 2025; they’re forecasting as much as 10 percent growth, with technology noted as a key sector to watch.
   
   If you’re considering M&A or other strategic investments in the coming months, a channel finance program can free up cash and reduce the need for loans. You can structure these flexible programs to fit your financing needs for the transaction.

Customizable programs deliver control and flexibility

Convincing the skeptics and bridging the channel finance divide means taking a new look at what banks can deliver. Today’s programs are highly customizable to the unique needs of each organization, letting companies adjust terms, cost, and other variables as company priorities and cash flow needs change. 

Robust technology with real-time communication backs Wells Fargo’s leading channel finance programs. The result? A seamless process for orders, invoices, and payments. 

As a market leader with more than 25 years of experience, relationships across over 1,000 channel partners, and trading in 19 different currencies, Wells Fargo offers a worldwide lens and broad network that can help IT providers to thrive. Our strength and stability, dedicated industry team, and top-tier technology help us offer channel finance programs suited to all types of situations. 

Connect with us to learn more, discuss your requirements, and close the cash flow gaps in your IT sales process.