Microsoft has launched a business finance service for the purchase of software, hardware and services, saying access to money can increase deal sizes by as much as 70 per cent.

Typically, that figure is in the 15-40 per cent range, says Elizabeth Aris, Project Lead – Microsoft Financing at Microsoft Australia. Even better is the affect it can have on service margins, says Aris.

When negotiating deals with a customer a little light on money, Aris says its usually the services and maintenance component that systems integrators and resellers have to hack into when trying o price a deal within a customer’s budget.

With hardware and software pricing pretty tightly controlled y vendors, there’s not a lot of margin left to cut and so the reseller needs to find shortcuts in the offering or take a gross profit margin cut on the services component. But with a financing option available customers can be more easily afford to buy sophisticated systems.

Microsoft announced the introduction of Microsoft to Australia in conjunction to with the local subsidiary of De Lage Landen Australia, part of a huge Dutch banking group. The Financing Program cut the average Australian company’s up-front financial investment by two-thirds with payment periods typically spread over two to five years.

The service is meant to redress the situation that exists in Australia and globally where financing is easier to obtain for hardware investments, but almost impossible for software or services. Forrester Research estimates that while 25 per cent of hardware is bought on finance only 3 per cent of software is paid for that way. To put a dollar figure to that do the math on IDC’s prediction that in 2006 Australia will outlay $3 billion on software and a further $11 billion on services.

Microsoft is sufficiently confident in its product and partner’s abilities to basically underwrite the money De Lage Landen lends out.

For the resellers, access to this sort of financing can mean the difference between winning a deal and missing out. It also guarantees payment (usually) within 48 hours of approval.

For businesses, it allows them to spread payments over several years and preserve their valuable capital. The application process is handled via the Microsoft Partner, with a simple one page application to be filled out detailing the products and services to be financed and details to allow De Lage Landen to run credit checks etc. Aris says funding can be completed within 48 hours on the deals which have a minimum investment spend of $15,000. However under terms of the deal struck with De Lage Landen (which basically provides the finance as a whitelable service), there is no minimum spend on hardware as is often the case in other deals and the mix of hardware service and software is entirely flexible.

As long as there is at least “some little piece of Microsoft software” in the deal then it qualifies for the financing, said Aris.

“Our mission is not to try to create a whole finance division as you have seen with some hardware vendors,” explained Aris. “We are doing it so that customers can afford to do more stuff with Microsoft product.”

“When we talk to customers they always have this big long list of things they would love to do, but they can’t because they don’t have access to the money,” she said.

Aris explained there is no financial incentive for the Partner, the main benefit is ability to win sales tham they might have missed without financing. “It also helps them get paid faster,” she said.

Microsoft research has shown there is significant demand for competitive financing from customers, with more than 75 per cent indicating they would prefer a “pay as you go” payment structure.

Partners are required to sing up with Microsoft to acce3ss the financing service but Aris says there’s nothing to stop any of them accessing the service.