Microsoft, Creative Financing, and the Bank of EAC

Microsoft’s announcement that it would offer 0% financing to new customers of its Dynamics product line is a welcome offering at a time when the credit crisis requires out-of-the-box solutions to the fact that a bunch of ungrateful banks are unwilling to loan the taxpayer those megabucks we lent them as part of the recent “bailout” package.

I genuinely like Microsoft's approach, for the simple fact that making it as easy as possible for companies to buy enterprise software is absolutely essential at a time when the spirit may be willing but the flesh all too weak. In fact, the benefits for customers can be huge: Microsoft execs told me last week in a pre-briefing that Microsoft will effectively “buy down” whatever the standard loan terms are to zero – meaning a customer looking at a 10 percent loan would be effectively getting a 10 percent discount on the cost of the software. Not a bad deal in times like these.

As I sorted through the details of the announcement, and its rationale and potential impact, I realized that Microsoft isn’t the only one offered creative financing to its customers. In fact, having recently spent some time looking at my company’s books, I realize that I actually beat Microsoft to the punch: a look at my receivables shows that I’ve been extending a 0% line of credit to a number of my customers, for the last six months in some cases. Never mind the fact that some of them, unlike Microsoft’s target customers, aren’t exactly cash-poor or unable to raise money: Altruism is its own reward.

This unexpected realization makes me feel like I’m a front-line warrior in Depression 2.0 – doing my part for God, country, and enterprise software by helping my deadbeats, er, clients, as they struggle through these uncertain times. It’s a lovely feeling not too dissimilar to the feeling I had when I heard that the ex-head of Lehman was roughed up in the locker room at Lehman's own club by a now-unemployed, but still buffed, banker. Satisfying, as only enormous irony can be.

Of course, I don’t have the kind of bank account that Microsoft can fall back on, in fact things are getting perilously low at the Bank of EAC. As a result we’re cutting back on unnecessary items all around, such as that new yacht I promised my gardener, my second Ferrari, and three square meals a day for the wife and kids. (Don’t worry about the food part, here in Berkeley we get all our nutrition grazing in the fields of liberal self-righteousness, especially since the election. So delicious and so filling.)

But the sacrifice is worth it, particularly for the smaller companies who are genuinely struggling. Seriously. My fees may not represent that big a chunk of the credit shortfall by themselves, but I’m sure if more individuals like me offered 0% financing to our clients, we’d be out of this financial mess in no time. Or my name isn’t Alan Greenspan.

And lucky for me it ain’t. I don't want to get roughed up at the gym either....