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Lifecycle Solution Finance Ltd.

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Systems Integrator Finance Programs

Why do Customers Finance Solutions?

Why do Customers Finance Solutions?

End-User Benefits

Solution Affordability

CashflowOptimisation

Tax Relief Incentives

Cash in hand

delivers better returns

“

We’ve kept our cash reserves intact to sustain

our core business.

All our credit facilities are still intact with our bank

and we are free to use our assets for loans

against core business investments.

We have invested in the future of our company

without impacting our financial strength

”P Stafford

Financial Controller

SECURITAS

Why Should Resellers Offer Finance?

Why Should Resellers Offer Finance?

“ the quality of your solution is

irrelevant if it isn’t affordable ”

Why Should Resellers Offer Finance?

Solution Affordability

Optimised Margin

Optimised Revenue &Cashflow

StickyBusiness

• Locks-in customer to solution roadmap

• Engage more customer stakeholders

• Banks future sales via upgrade/refresh

• Removes capital cost comparison

• Enables margins to be retained

• Discounting payment vs %

• Removes capital-cost barriers

• Enables “best” solution

• Total solution can be included

• 100% contract value up-front

• No “waiting” for payment

• Total revenue through accounts

“ customer order sizes

are typically 32% higher

when using finance1 ”

1 BNPPLS Study 2012

Reseller

Benefits

Motivations to Finance

Solution Sold as Cash Purchase Solution Sold on Finance

Competition Like-for-like comparison with competitor Cannot compare against Competitor’s cash price

Negotiation Discounting Retail Price = major impact on margin Discounting Payment Value = minor impact on margin

Cost to Customer Up Front Total solution cost is payable up front Only first monthly/quarterly payment due

Affordability to Customer Maximum capital budget they can find Predictable monthly/quarterly operating expense

Customer Receives Solution Immediately Immediately

Tax Relief Can only depreciate assets Payments can be 100% deductible against tax

Cash in Hand Cash tied-up in depreciating assets Cash can be re-invested elsewhere for greater returns

Reseller Paid for Hard/Software Typically 30~90 days after handover Within 7-days of Handover (Typically within 48hrs)

Reseller Paid for Services Typically 30~90 days after handover Within 7-days of Handover (Typically within 48hrs)

Reseller Paid for Maint./Support Typically only realise revenue quarterly/annually Within 7-days of Handover (Typically within 48hrs)*

Reseller Paid for Cloud/SaaS Typically only realise revenue quarterly/annually Within 7-days of Handover (Typically within 48hrs)*

Reseller Pays Supply-Chain Negative cashflow if delayed payment by Customer Negotiate additional discount for early payment

Customer Loyalty None = harder to sell upgrades/refreshes Tied-in = easier to sell upgrades/refreshes

* Funded Element. Non-Funded element recovered monthly/quarterly over the contract term

How do you Sell Finance Solutions?

How Should Resellers Sell Finance Solutions?

•Always lead with a lease quote (remove all capital cost from your quotes and price-lists)

•Quoting capital cost leads to price-comparisons or “% off List” discounting (costing you margin!)

•Say you “only” deliver your solutions an operating cost (i.e. on lease). Explain benefits of why

•Use ‘savings vs. cash’ to demonstrate effective savings/discounting

Forget Capital Cost

•What operational benefits (income) does your solution bring?

•Map these monthly benefits against the monthly payment value to show ROI

Build an ROI Case

•What operational benefits (savings) does your solution bring?

•Map these monthly benefits against the monthly payment value to show “cost neutrality”

Build a “Cost Neutral” Case

What’s the Process?

Distributed Finance Models

Reseller-Led Model

Supply Chain

Customer

Lifecycle

Customer enters

finance contract

Lifecycle pays the Reseller

the full contract value

Reseller delivers the

solution to the Customer

Reseller pays the

Suppliers for the goods

Reseller

1

2

3

4

The Reseller “owns” the finance cycle.

Payout to Reseller ≤ 7-days of Customer Acceptance.

100% of Contract revenue goes through the Reseller.

Reseller pays Suppliers for goods supplied:

Standard trade-account payment terms.

Potential discount offered for early payment?

Outcomes

Lifecycle Financed Solution Process

Pre-Sales

•Business as Usual.

•Design the solution required and create a BoQ: h/ware, s/ware, services, support, cloud, etc.

Underwriting

•Submit deal proposal to Lifecycle (via website or email).

•Lifecycle Underwriting will confirm acceptance and quotation.

•Customer raises PO/Commitment to you for contract value (e.g. X number of payments of £X value).

Delivery

•Lifecycle issues contract documentation. Customer signs contract.

•Supply, install, test and commission the solution as appropriate.

•Customer signs Acceptance Certificate (BoQ).

Payout

•Lifecycle pays you the due contract value within 7-days (typically within 48-hours).

•Lifecycle can operate as your agent to collect Non-funded elements (e.g. additional services etc.)

Repeat Sales

•Repeat process at end of contract term and/or facilitate upgrades/refreshes.

•Ability to purchase can be facilitated at arms length (typically value of one rental payment).

Financing Extended or Roll-out Projects

• Contract Schedule A

• Value for Phase 1

• BoQ for Phase 1

• Handover Phase 1

• Payout Phase 1

• Rental = A

Project Phase

1

• Contract Schedule B

• Value for Phase 2

• BoQ for Phase 2

• Handover Phase 2

• Payout Phase 2

•Rental = A+B

Project Phase

2

• Contract Schedule C

• Value for Phase 3

• BoQ for Phase 3

• Handover Phase 3

•Payout Phase 3

•Rental = A+B+C

Project Phase

3

Lifecycle Master Contract

Master contract with Customer – project-phases defined as Schedules.

Schedules are paid-out as each project-phase is handed over.

Removes cashflow burden on supplier payments and cost of internal service delivery.

Customer rental value increases as each project-phase is handed over.

Deferred Payment Options

Customer gets solution now – pays later

Defer first payment by 3~6 Months

Leverage future budget releases

Enable time to deliver ROI biz-plans

Enable time to deliver cost-neutral biz-plans

Align payment plan for new builds and fit-outs

Reseller still gets paid up front

*Payment Deferral Option and Deferral Period is subject to status and business case

Lifecycle enables Customers to defer the initial payment for your solution by up to 6-months from handover…

Self-Financing for Demo Systems

Self-Financing NFR Demo Systems

Strengthen Vendor relationships

Accelerate Vendor-accreditations

Obtain better Vendor-discounting

Enable try-before-buy facilities

Differentiator against competition

Value-add service to Customers

Reduce Customer sales-cycles

Refresh in line with Vendor roadmaps

Lifecycle enables Systems Integrators to self-finance Not for Resale Demo Systems.

Remove Cost

Barrier

• No Capital Cost

• Price-per-Month

• Affordability

Build Pipeline

• Defer first payment by 3~6 months to allow time to build sales pipelines

Drive Sales

• On/Offsite Demo

• Try-Before-Buy

• Test Lab Facility

Cost Neutralise

• Sales revenue can be apportioned to cover operating expense of Demo

Why

Typical Engagement with Finance Companies

“Hi. Can you help me on a deal?”

“Sure. Do you meet all our criteria?”

“I don’t know”

“Ok, we’ll get back to you in a week or so”

“Hello…, I haven’t heard anything…”

“Oh, sorry. We can’t help in this case because of XYZ”

“Ok…, any ideas on what we can do?”

“Sure. Do you meet all our criteria?”

“Aaaaarrrrgh!”

Lifecycle don’t just finance ‘Assets’…, we finance ‘Solutions’

Consultancy and Design

Software

Install and Commissioning

Hardware

Training

Maintenance and Support

Cloud and SaaS Subscriptions

Managed Services

BUSINESS PARTNER A virtual extension of your business overnight, without carrying the associated overhead

Understanding your business in depth and developing solutions to support your strategy

Focused on helping you proactively grow your business, not just servicing ad hoc demand

Exceptional customer-service [pre-qualifications, pre-sales consultancy, fast-track underwriting]

TOTAL SOLUTION FUNDER Financing entire solutions – not just product

Hardware + Software + Services + Maintenance & Support + Cloud

Support for funding reseller products and services as part of a “unified solution”

Optional payment deferral to support NFR programs and ROI sales [subject to status]

MULTIPLE UN-BIASED CREDIT LINES Not limited to a single credit-line [as is the case with typical vendor brands – Dell, HP, Cisco, etc.]

No minimum requirement for vendor-specific hardware percentage

Negligible knock-back rate i.e. can fund customers across credit-status spectrum

Single point of access to global project funding resources

LIFECYCLE ALLIANCE PROGRAM Essential tools for building a successful business

Virtual white-labelled Finance Operations Team [Telephone, Email, Video]

White-labelled marketing and business development collateral [pdf brochures, videos, etc.]

Marketing and campaigning assistance

Lifecycle don’t just ‘Provide’,… we ‘Partner’

Lifecycle Alliance

White-label Finance

Team

Helpdesk

EmailTelephone

Video

Free Pre-qualification

Fast-track Underwriting

White-label Biz Dev

Collateral

Marketing Campaign

Support

NFR + Solution Bundling

Good News For You

My sales leads are no longer restricted by capital budget

I can finance my “entire solution” not just the hardware

I can engage more customer stakeholders

Now it’s easy to sell an ROI business case

I can get paid for the full contract up-front

No more pressures on our cashflow

I’ve become “sticky” to my customer

Now I’ve got future repeat-sales in the bag

It’s super easy – Lifecycle are a virtual extension to my business

Good News For Your Vendors

My Reseller is proactive and value-add

My Reseller is empowering itself as a sales channel

My Reseller is removing the capital cost barriers to my products

My Reseller is investing in demo systems to drive business

My Reseller is actively advancing their accreditation

My Reseller is helping to reduce sales cycles

My Reseller is locking my products into Customer roadmaps

Good News For Your Customers

I’ve got no up front capital cost issues

The best-solution is now “affordable”

I get the solution I needed without compromise

Total solution comes as a unified monthly payment

I can pay monthly or pay quarterly

If I have good credit I can defer paying 3~6 months

I can put my cash to better use in my business

I get savings vs Cash Purchase (tax accounting)

My solution gets routine upgrade / refresh

There’s no impact on credit line with my bank

I’ve built a stronger relationship with my supplier

I can align with my Vendor’s roadmap

Proven Value

“

Lifecycle support our business with a program of specialist leasing facilities to

enable operating cost models for our solutions…

Over the past 3-years we have transacted over £5M in business with Lifecycle...

At the current time we are processing approximately £300k of leasing a month

with them on an exclusive basis…

”

Managing Director

NIX

Summary

Offering Lifecycle finance is an essential ‘value-add’ to re-sale (VAR)

Strengthen relationships with your Vendors

o Shows proactive solutions to optimise your performance as a channel

o Investment in NFR demo systems accelerates your accreditation, optimises your discounts and reduces your sales cycles

Strengthen relationships with your Customers

o Clear differentiator against your competition

o Creates solution affordability – get the solution they really need, now

o Delivers cashflow predictability – predictable operating expense for solution life cycle

o Delivers tax relief and demonstrable savings vs. cash

Accelerates your business

o Enables complex and high-value solutions to be sold as an affordable, predicable monthly price

o Typical 32% increase on sales volumes when offering finance

o Optimises your cashflow – contract payout within 7-days (no waiting 30~90 days)

o Enables you to negotiate preferable terms with your supply-chain

o Makes you “sticky” to your Customer – locking out competition

Minimal effort to launch and operate

o Lifecycle can operate as the virtual finance division of your business

o Quote OpEx before CapEx

o Evangelise through existing communication channels

T: +44 844 5000 656E: enquiry@lifecycle-sf.comW: lifecycle-sf.com

© Lifecycle Solution Finance LTD

Fraser Hamilton | DirectorM: +44 7717 846 990E: fraser.hamilton@lifecycle-sf.com