New COVID-19 aid program enables partners and customers to finance purchases and not pay until 2021
Cisco and its finance arm, Cisco Finance, are working together to provide customers with billions of dollars in credit and generous payment terms to purchase operationally necessary products without laying out cash until 2021. The program will likely benefit Cisco partners through which many of these financed deals will flow.
The Lowdown: As with other vendors, Cisco is seeing its partners and customers come under stress from the COVID-19 pandemic. As the economy heads into a deep recession, businesses are looking to preserve cash and protect cash flow. The new Cisco Business Resiliency Program will allow customers to purchase — largely through partners — without substantial up-front cash outlays, Cisco said.
The Details: Cisco and Cisco Finance are committing $2.5 billion through the new Business Resiliency Program, which provides customers with a 90-day up-front payment holiday and deferment of up to 95% of the cost until January 2021, at which time customers will begin making payments on the total financed amount. All Cisco products and services are eligible for the program.
Additionally, Cisco is enabling the financing of refurbished products through the Cisco Refresh program. Cisco is not only providing financing on used products but also extending the number of refurbished products available and providing more discounts to make goods more affordable to partners and customers.
Customers are able to finance up to 5% of the professional services offered by partners in support of Cisco products. The inclusion of partner-provided services helps Cisco resellers and integrators include their support as part of the financed product sales.
The Impact: The Cisco Business Resiliency program is one of several efforts by Cisco and other vendors to ease the financial pressure on partners and customers. Cisco says the available financing will help customers acquire the technology necessary to run their businesses while simultaneously speeding up sales cycles for partners. Credit and financing, usually an overlooked aspect of channel go-to-market strategies, is taking on significant importance amid the COVID-19 pandemic, which is causing severe economic disruption. The Cisco financing program has the potential to ease the burden without hitting customers with balloon payments when loan payments start in 2021. Additionally, the program will help Cisco and partners recognize sales during the economic crisis.
Background: The Cisco financing program is the latest in a series of new fiscal programs offered by vendors and their financing arms to enable customers to continue buying despite the economic downturn. HPE and Microsoft have also announced extended credit and financing programs to partners and customers. According to IDC, IT spending could contract nearly 3% in 2021 due to the COVID-19 disruptions.
The Buzz: “Cisco’s customers and partners are under enormous pressure to keep their businesses connected while remaining productive and secure,” said Chuck Robbins, chairman and CEO of Cisco. “Whether it’s technology, financing, or helping those most in need, Cisco is committed to working together to fight this pandemic on every front.”
“Cisco Capital’s goal is to make it easier for customers and partners to acquire the technology they need to keep their businesses running and productive. Their success is our priority,” said Kristine A. Snow, senior vice president and president of Cisco Capital. “The new Business Resiliency Program is designed with this in mind and will help address some of our customers’ most pressing concerns.”
Channelnomics Point of View: Many vendors and distributors are offering partners credit and financing, low-cost and free software, technical training and support, and other measures to mitigate the economic impact of COVID-19. Channelnomics is tracking the vendor and distributor community’s programs. For details, visit Channelnomics’ COVID-19 in the Channel special coverage.