Five Point Capital - ERP Software Financing: the Future? – Overview for Company Owner

http://www.fivepointcapital.com/

In our case – we serve Microsoft Business Solutions ERP and CRM products:
Microsoft Great Plains, Microsoft CRM, Navision, Microsoft RMS, as well as
we do customization and integration to these products. We would like to
share with you our experience with financing through Microsoft Financial
Corporation, the entity handling software financing for Great Plains, CRM,
Solomon, Navision & Axapta.

0% interest financing. Well – this is probably a dream or something that
should not be practiced (otherwise you compromise MRP list price). However,
considering the nature of software – this is something that costs nothing to
sell – assuming that all the software development expenses and costs are
already behind. From time to time Microsoft Business Solutions practices
this 0% financing. Right now (June 2005) new customers are enjoying this
promotion

Increasing Number of Clients – who use financing. Last year we saw clients
who were trying to increase their market share, by fueling their efforts
with financing of all the kinds, including MBS financing. This year we see
regular clients, who are using financing just to stabilize cash flow. Some
of these clients have enough cash to purchase the system, but they still
finance.

Car vs. House financing. This is classical American dilemma. In my personal
opinion – you can not pay upfront the price of the real estate, so you use
mortgage to finance you house. However, again this is my personal opinion –
car financing is something you should probably stay away from, because car
loses value as you leave the dealership place – you can not sell the car on
your own for the same or similar price. Software is very challenging asset –
from one side – ERP might be something your business get he market value on,
from another side – if it is not implemented or implemented only half of the
way – it might be the burden. Maybe you, as business owner have to do your
homework long evening and weekend hours to decide on your MRP financing.

Consulting Paradox. This is something I would prefer to keep silence about
and tell when I face to face with the prospect. You can finance not only the
software, but also the implementation. Imagine the situation, when Microsoft
Business Solution Partner gives you the proposals where Software list price
is k$25 and estimated services to implement the systems are another k$25.
You can finance k$50. And if you catch 0% promotion – you finance services
at 0% and the most amazing fact is – MBS Partner will get the money upfront
from Microsoft Finance Corporation for both pieces (k$50)

How to trade your system in? if you or MBS partner failed to implement – is
it any known way to trade in the system. Well – this is the place where we
would like to stress – consider first to be conservative and do not use
financing...
Received on Wed Sep 12 2007 - 11:59:51 EDT