As tax season quickly approaches, it offers dealers more than just their yearly “check in” with “Uncle Sam” – it’s an opportunity to take a hard look at how their company handles cash flow and assess business practices that can help them improve their approach. As dealers set to work on their books, one area that can help them optimize their cash flow best practices is evaluating how they are working with distributors.

“Distributors provide a lot of benefits that can often be overlooked and most of them have a big impact on the bottom line — it’s more than just bulk order capabilities or supply chain efficiencies,” said Dennis Holzer, Executive Director of the PowerHouse Alliance. “Taking advantage of some of these benefits can ensure that dealers have the financial flexibility to invest in growth opportunities and navigate the ebbs and flows of business cycles effectively.”

Ways Your Distributor Can Help Improve Your Cash Flow

As we talked with a group of distributors on the topic there were three key areas that emerged for dealers to consider in order to improve how they manage cash flow.

Inventory Management

Distributors play a key role in helping dealers smartly manage their inventory, which in turn, positively impacts their cash flow. Here’s the deal: instead of dealers having to tie up a lot of cash to keep a huge stock of products (just in case), they can lean on distributors who’ve got a wide variety ready to go. It’s like having a massive pantry without needing to build or maintain one yourself – you’re no longer in danger of forgetting about that jar of marinara in the back only to come across it when it is well past its expiration date.

Randy Hall, President of AlarMax adds, “When dealers carry product directly, they assume some financial risk and potential liability. As we all know, technology changes quickly and the last thing any dealer wants is to be sitting on a lot of product that has slowly depreciated or is on the road to becoming obsolete. This is where distributors can be critical partners to dealers.”

Seasonal products in particular can be a pain point for many dealers, for example it can be challenging to be sitting on several outdoor audio set ups when the ground is starting to freeze.  Working with a local distributor can help dealers optimize their inventory turnover rates, reduce storage costs, and maximize profitability by having the right products available at the right times.

Planning Your Project Timelines

It is rare for a dealer to have a meeting with a potential client and for that project to turn around in less than 90 days, that’s just the reality. Few people are ready to pull the trigger on a project quickly and even when the project begins change orders are not uncommon.

As Brett Provenzano from ECD put it, “Everyone knows that project timelines are never firm until the day of. Rather than stocking wire, hardware, video, HDMI products, networking, amplifiers, and speakers, hoping the job happens timely, working with what your distributor has in stock can help you turn your inventory in one day. Working with a distributor means that there is no need to tie up your cash waiting for that project to happen, if it is a product we stock, have it delivered when you need it. For non-stock items, we can help plan out ordering so that it arrives when you need it. We help our dealers grow without taking on more inventory, space, and warehousing by leveraging our warehouse as their warehouse.”

Additionally, distributors sit at an interesting cross section of the industry and keep a tight eye on trends. Since most distributors carry a broad range of lines this also offers dealers a lot of flexibility for their projects. For instance, if a particular AV receiver is out of stock, a distributor can suggest a comparable alternative that meets the project’s specifications and price point. This not only keeps the project on track but also maintains the dealer’s reputation for reliability and service. Additionally, distributors often have in-depth knowledge of their product lines and can provide technical advice and support to ensure the substitute product integrates seamlessly into the project.

Expanding Your Product Offerings

Product support and advice does not stop at helping dealers find alternatives when they’re in a pinch. Distributors are known for hosting trainings year-round to help dealers get familiar with new product lines and entirely new categories.

“Over the last three years we’ve seen incredible demand for both smart lighting, smart shading and acoustics. This represents a new category for many of our dealers and PowerHouse members have offered a full schedule of training to make sure dealers feel confident before ever heading out into the field to install products,” said Holzer.

By providing comprehensive training and educational programs, distributors help arm dealers with the necessary expertise to compete in new segments and diversify their portfolio which will ultimately enhance their appeal to a broader customer base.

As tax season prompts a closer examination of financial practices, it’s clear that working with distributors offers substantial advantages for dealers aiming to improve their cash flow. From smarter inventory management to flexible project planning and expanding product offerings, distributors are invaluable partners in navigating the financial complexities of the tech industry.

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