Resellers risk their business for Government cash.
The voucher scheme
The Government has expanded and simplified its voucher scheme, which is great news for small businesses and telecoms resellers, who can now claim back up to £3000 on the installation of an Internet leased line. The end customer has to be in one of the 22 eligible cities and meet fairly broad criteria. The reseller needs to be registered on the scheme, which runs until April 2015.
The catch
Straightforward enough but there is one wrinkle that could end up catching out resellers on the scheme and undermining the value of their businesses.
Over 80% of leased lines are sold on 36-month contracts with zero installation costs. On the face of it this gives the end user and the reseller nothing to claim and the alternative of switching to a one-year contract often increases the monthly rental.
The solution
The solution for many resellers is to sell connectivity on a 36 month contract with zero installation charges and then simply to issue an invoice to the end customer for £3000 up-front. This practice breaches the scheme rules and the reseller risks an audit and a demand to pay back Government all money received in this way.
Even if the Government does not immediately audit, they have up to 10 years to do so. This leave a poison pill on the reseller’s balance sheet and any prospective buyer of the business will probably knock this off the price they offer. Maybe even more if they think the reseller is also risking a fine.
Jola Cloud Solutions offer a legitimate way to create once-off, claimable fees from longer term, zero install contracts.
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