Products protect SA resellers

By Alex Kayle, Senior portals journalist

Johannesburg, 01 Apr 2009

Channel Capital, the local finance division of Tarsus Technologies, formed in 2007, has rolled out insurance products claiming to give credit protection to South African IT resellers that are feeling the pain of the economic crisis.

Ron Keschner, MD of Channel Capital, says the global economic downturn is harming the South African IT industry: "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 the distributors are left to deal with the crunch - it's a problem that's affecting the entire value chain and something we believe stands to take a far greater toll over the coming months.”

Cashing out

Keschner says the new products give resellers immediate access to cash that's been locked up in their extended debtors' book, as well as the ability to insure their company against losses incurred as a result of customer insolvencies. CashInjector gives resellers the ability to gain access to money owed by their customers, he says.

The process takes a couple of days, and following an assessment of the reseller's debtors' book, they are paid up to 70% of the monies owed on presentation of invoice and proof of delivery, he notes. The balance is then paid across to the reseller and rates are formalised upfront in a facility letter.

CreditSure targets longer-term management of resellers' cash flow, and protects them from the losses they can experience as a result of customer insolvency.

Adding to Channel Capital's portfolio is BusinessSure and PersonalSure, which help resellers cover their business and personal assets, while AssetSure is specifically designed to provide coverage for assets on rental-finance, the company says.

“Reserve Bank governor Tito Mbweni is warning that a recession might still be on its way for SA, despite the cash injections. Liquidations in SA are up 70% month-on-month compared to last year, and those are scary statistics for the reseller. Because our product is very cheap, we need to bring on 300 resellers by July for our insurers to make it viable. The race is on,” concludes Keschner.