Interest Rate Hike Could Impact IT Budgets
By Christine Kern, contributing writer
The Federal Reserve raised interest rates for the first time in nearly six years, ranging from 0.25 percent to 0.5 percent, up from 0 percent to 0.25 percent. While interest rates may not seem to have much to do with information technology adoption, the finance experts at Logicalis US, an international IT solutions and managed services provider, have pointed out that they are actually quite closely integrated.
“Because it hasn’t happened for so long, a rise in the interest rate will have a cascading effect on business that organizations may find difficult to anticipate,” says Rich Pirrotta, CFO, Logicalis US. “CIOs who have already prepared their budgets for 2016 may want to revisit their plans and talk with their CFOs about sales projections, access to capital and anticipated capex spends to ensure they’re ready. They should also investigate the smartest ways to finance their IT purchases if the interest rate increase does indeed occur.”
Logicalis U.S. finance expert Rich Pirrotta and VP of finance Todd Yaekle, suggest that VARs ask CFOs five key questions in light of the interest rate hike:
- Can you access the capital we need for 2016 IT projects?
- Should you be thinking about leasing?
- How can we better negotiate with suppliers to mitigate the impact?
- What will a stronger U.S. dollar mean to international sales?
- Are there steps the CIO or CTO can take to help, such as migrating to cloud computing, or to managed services?
You may also want to take a look at financing you can offer your clients. In a Business Solutions guest column from Great America, you can find a list of benefits of offering financing, including a boost to your sales, improved margins, and the ability to offer seasonal terms.