Dive Brief:
- Technology services distributor Avant Communications launched a capital solutions program to give its partners access to cash, the company announced at its annual Special Forces Summit Tuesday.
- The financial arrangement advances monthly sales commissions to technology advisors, with Avant taking a higher split of the commissions and becoming the exclusive TSD for the partner, Avant CFO Matt Warren told Channel Dive.
- The company has structured one-off agreements with partners over the years but didn’t create a standardized offering until two months ago, according to Warren.
Dive Insight:
Most TSDs offer financing options for their agent partners, whose recurring revenue model may limit their budget for short-term investments. Avant aims to make its financing program straightforward and consistent across its channel ecosystem.
“We're trying to keep it down to five or six terms that are even discussed,” Warren said. “We don't want to turn this into a custom deal for every single person.”
Advanced commissions are the essential benefit. Warren stressed that Avant is not buying equity in a TA’s customer base.
“It is purely that you bring us the deal, we take a look at how much you'd be owed in the first term of that contract, we advance you that much money in that specific deal and then the whole rest of your book is still your book,” Warren said. “As soon as we get repaid, we just turn the residuals back on.”
Historically, Avant has structured agreements for inbound requests from select TAs. Partners often use the liquidity to hire, invest in marketing, pay for events or make acquisitions. The capital program meets an increasing demand from TAs, providing a service he said cash-strapped partners will appreciate.
“Many of these partners feel like they don't have a lot of banking options, and going to your local bank and raising capital is time consuming, and banks don't understand our model,” Warren said. “The beauty of it is, the commissions are rolling through us, so we know exactly when the money's coming in, and it's a very safe thing for us to underwrite.”
