Device costs are rising again, with chip shortages pushing up the price of replacements, and most partners are responding in the same way. They find a finance house, spread the bill over three years and hope the customer stops asking questions. I think that is the wrong answer. The channel does not need another lender. It needs a partner that actually wants the device back.
Why does a lender change so little for the channel?
A lender’s job is done the moment the money moves. The device is collateral, and when the contract ends it becomes somebody else’s problem. In practice, that somebody is your customer and, because you sold it to them, you. Someone has to collect the kit, wipe it, agree its condition and work out what happens next. In too many deals, nobody decided who that would be until the day it mattered.
Spreading the cost does help. It gives your customer’s finance team predictability, which they value above almost everything else. But the monthly figure is smoother while the risk stays exactly where it was. The customer still owns the refresh, the disposal and the question of what the device is worth in three years, and when they are unhappy about any of it, they ring you, not the lender.
What is different about rental and re-rental?
At InnoVent, a device is deployed, comes back, is refurbished and goes out again. Value is recovered at every stage rather than lost at the first. That is why I say we are not a lender in a nicer jacket. A lender is paid to take a view on credit. A rental partner is paid to take a view on the device, and that changes who cares about the ending.
It also changes the conversation partners can have with their own customers. Reusing and refurbishing devices cuts cost and carbon together, and procurement teams are asking harder questions about both, often in tenders where you are up against other partners. A credible answer on what happens to a device at end of life is increasingly part of winning the work.
Why is end of term the moment that matters?
Many buyers hesitate to sign because they fear the end of the contract. Do the devices come back? Who collects them? Is there a charge? Do we have to replace everything at once? If your customer asks you and you cannot answer in one sentence, they will remember it. A good partner removes that fear with clear options to return, refresh or extend, set out at the start rather than discovered at the end. That protects your renewals and keeps the next conversation yours.
What does that look like with a real customer?
A major charity asked us to review a client device refresh it last did during Covid. At the time it had bought a mix of desktops and laptops from tier one Windows suppliers and Apple resellers, whatever was available at a price it could afford. It had no clear way to remarket that estate and replace it with a more modern range at a sensible cost.
The pressure was coming from two directions. Chip shortages had pushed the capital cost of newer devices up by double digits, while the existing devices were failing and underperforming more often. Its bank-owned finance house, meanwhile, was more interested in extending the lease for another year, or selling the charity all the assets at a premium and walking away, than in refreshing them at the end of the three year term. It had neither a way to manage the old devices out cost effectively nor the supplier relationships to deliver a refresh that beat the budget.
We took a different route. We are remarketing the charity’s existing estate and supplying and deploying a new one on our subscription approach, which saves capital, manages operating costs and frees up cash to reinvest in the charity’s core purposes. We are recovering the old leased devices ourselves and returning them to the existing lease provider, which avoids the inefficiencies and overcharges that can come with an incumbent’s end of lease process. We have also built a hybrid of new devices and our own refurbished ones, so the budget goes further and the shortage-driven price rises bite less. Throughout, the end user has been shielded from end of life exposure.
The saving is around 15-20% for the end customer, and it has cemented a reseller partnership for us too. The charity did not need a cheaper lender. It needed a partner that could manage the ending as well as it managed the start.
What should partners ask before their next deal?
Before your next refresh cycle, put three questions to your finance partner. Who owns the risk if the value of the device falls? Who takes the device back? And what happens to it afterwards? If the answers are “your customer”, “you” and “not our department”, you have a lender, and your customers are carrying a risk you may not have noticed.
The channel has plenty of ways to fund hardware. What it is short of is a partner that is as interested in the last day of the contract as the first.
This article was produced in association with InnoVent and is classified as partner content. What is partner content? See more here.
Duane Lent
Duane Lent is Group CEO of InnoVent UK
