Partners Can Use Recurring Revenue As Collateral In New Intelisys, ScanSource Hardware Purchasing Program

Intelisys, a ScanSource company, is introducing a new financing program that lets partners use their monthly recurring revenue from Intelisys as collateral to purchase hardware through IT distributor ScanSource.

Master agent Intelisys was acquired by Greenville, S.C.-based ScanSource last August. The convergence of the two companies has been bridging the gap between traditional hardware resellers and agent partners that sell connectivity and services-based offerings.

The latest financing program from Intelisys, the Hardware Purchasing Power Program, will make it easier for partners who are already selling cloud and connectivity services to resell technology, too, Michael Ketchum, vice president of finance for Intelisys, told CRN exclusively.

[Related: ScanSource's Intelisys Unit Acquires Verizon-Exclusive Master Agent Kingcom's Channel Business]

"We believe this is an exciting opportunity on the hardware side for agents that have not traditionally played in that world, said Andrew Pryfogle, senior vice president of cloud transformation for Intelisys.

In the program, agent partners with carrier or cloud services billing through Intelisys will be able to use this recurring revenue for hardware loans. These partners won't have to put up any other kind of collateral, and don't need a history of hardware selling.

While some ScanSource vendors and products require certifications and volume commitments, there are many solutions that don't have advanced training requirements. These products, such as voice endpoint and wireless infrastructure, will be "low hanging fruit" for Intelisys' agent community who will be able to tack on equipment to their telecom and connectivity sales, Pryfogle said.

Immediately, Intelisys partners will have access to ScanSource's terms it has with its vendors. Agents will collect revenue upfront for any hardware sales attached to services-based sales, said Petaluma, Calif.-based Intelisys.

"This is an easy path for [agents] to get into the equipment business and start selling larger deals overnight," Pryfogle said.

According to Intelisys, the program is the first of its kind because it allows recurring revenue to be used as credit, something that isn't generally recognized by banks or financial institutions.

"Banks look at inventory and accounts receivable. Recurring revenue isn't something that banks traditionally value, but that's what our agent partners have," Intelisys' Ketchum said. "This program through ScanSource opens the door for partners who won't have to jump through hoops because they'll have the collateral that they didn't have before."

But agent partners aren't the only potential beneficiaries of the Hardware Purchasing Power Program. ScanSource's VARs looking to make the transition to recurring revenue now have greater incentive to do so through the new program because they can put these revenues towards their hardware purchases, according to Intelisys.

"This program also emphasizes to existing ScanSource VARs that there is power in building recurring revenue," Pryfogle said. "The ability to take a growing monthly recurring revenue stream and use it for greater access to capital and sell bigger deals is a tremendous advantage."

Pryfogle said that many ScanSource VARs are already considering building a recurring revenue stream, and that Intelisys is having conversations every day with interested VARs.

"We are definitely also marketing this program heavily to the ScanSource partner community," he added.

The Hardware Purchasing Power Program joins Intelisys' suite of financial support programs for its partners. Other programs include Intelisys' Partner Investment Program which extends up to $25,000 in term loans to partners billing $25,000 a month in services to help these partners grow their businesses. Intelisys also offers its Advanced Commissions Program that lets partners start receiving commissions on recurring sales in as few as 15 days after a contract is signed.

According to the master agent, Intelisys to date has provided more than $5 million in financing to qualified partners since the start of the Partner Investment and Advanced Commissions programs.