Good news for those in IT

According to this article, Dell expects to see higher revenues as corporations go through with their plans to replace old IT systems. This is good for both computer manufacturer's and re-sellers. Fortunately for those of us in the purchase order financing industry, computer resellers make fairly good clients. Especially those that work with large corporate clients and/or the government.

There is one catch about using purchase order financing in IT re-sale transactions. IT transactions generally have margins that are lower than 15%, while po financing companies like to work with companies that have margins of at least 20% to 30%. This may create a problem for some transactions. At the very least, it will require that clients use some of their own capital for the transaction. Company owners should always be mindful of transaction costs and only use po financing in those transactions where they have an ample cushion.

I expect that companies in this industry will certainly benefit from this trend though.

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Looking for information on purchase order financing? Read the factoring blog.