Despite the remnants of the sub-prime lending crisis, an economy in recession and lenders who don't seem to want to open their pocket books without a vise grip, the security alarm industry is ripe with opportunity for systems integrators who need funding to expand their business or keep their assets liquid.
Dealer programs are all the rage as systems integrators look for new ways to pump money into their businesses with recurring monthly revenue (RMR) and perhaps offset a lower installed base of systems or equipment. As has generally been the case, dealer programs offer a number of different types and flavors, variables that can be adeptly suited to the integrator and their customer mix. While the jury is still out as far as which dealer programs are best for participants-those which retain the equity in their accounts or those which buy the customer accounts outright-the bottom line is that both put ready cash into the hands of systems integrators and allow them to grow or stay afloat during tough times. They also provide marketing tools and support, training and education and even design and specification support.
Traditional lending institutions such as banks can't quite wrap their arms around the security industry. But they are beginning to understand that RMR is the lifeblood of the industry and it's more than security; that value-added solutions, coupled with service and maintenance contracts, may make lending or providing financing to the market a smart move.
New options emerge
PSA Security Networks, Westminster, Colo., recently unveiled an exciting equipment and installation program for members and non-members in conjunction with Integrator Support(r) and Susquehanna Commercial Finance(r) called Project Financing. It enables end-users to acquire the latest technology with flexible payment structures, no down payment and the ability to preserve their credit lines.
"This is a new way to think about our industry," said Bill Bozeman, president and CEO of PSA. "Security integrators have always struggled with cash flow and project sticker shock and this program not only gives the end-user flexibility but provides the integrator the ability to continue the business relationship."
Loosen up capital
The sought-after managed-services business model that generates recurring monthly revenue (RMR) is another key component of this program. Until now, the burglar alarm model that offers end-users a low upfront cost and generates a predictable recurring revenue stream has been unattainable for the systems integration community. With this program integrators can finance the ramp up to managed services, said Bozeman.
"The program, along with Integrator Support's dealer program, simplifies the implementation of RMR generation for integrators," said Sharon Shaw, vice president of Integrator Support. "The combination of Project Financing with remote video surveillance monitoring, hosted access control, and/or other managed services allows systems integrators to competitively market RMR-generating services through monthly payments and ensures they get paid on time."
There are other pluses. It's easier for the end-user to budget for the costs and easier to sell payments rather than one large lump sum. It may also help the integrator who goes into a bid process compete more effectively when they can offer monthly payments, something the competition may not be able to offer. Finally, it also conserves cash for the end-user as well.
"The integrator benefits from an easier sale and still owns the contract for the account," Shaw added.
John Busardo, a veteran of the financing industry, heads up PSA Security Network's Project Financing program. "We have the right recipe for success here," said Busardo, adding that the program is not traditional leasing, but financing at an extremely low simple interest rate on the entire loan amount. "Integrators can finance a percentage of the hard end of equipment costs and keep their capital and money liquid. They get the money upfront and can add a warranty. From start to finish, the integrator can get approval within hours once they complete the necessary paperwork," he said.