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Payment Solutions Scenarios

With Microsoft Payment Solutions, you can align payments to your budget calendar, conserve capital for other strategic use, or simply map payments to your deployment schedule – enabling a complete software, services and hardware solution.

The following three scenarios illustrate how your organization can benefit from Microsoft Payment Solutions.

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Maria works for a large manufacturer. They plan to build out a new supplier-facing eCommerce site to drive process improvements through their supply chain. Maria and her team intend to build the site using Microsoft’s application platform licensed via Microsoft Volume Licensing programs. The development and deployment phase will take 18 months, after which the site will be launched and start generating revenue. The team plans to use Microsoft Consulting Services for much of the integration effort.

The project includes $400,000 of software and $600,000 for services. But Maria’s CFO has competing investment priorities and is looking to avoid any large upfront investments this year. Maria’s CFO specifically wants to manage cash flow more strategically over the life of the project, because he would like to fund a few other projects over the next two years that will help increase employee productivity. If the company invests $1M in Maria’s project, they won’t be able to fund other projects. He is asking Maria to work with the purchasing department to find a solution.

Solution: ramped payments

To maximize cash flow in the short term, Maria’s company can work with a Microsoft Payment Solutions Specialist to develop a ramped payment plan. This will allow smaller payments in the first year when most of the planning and development work will be done, and larger payments in the last six months of the project after which it will start generating income. In this way, instead of paying $1M upfront in year one, the company can pay, for example, $20,000* immediately with payments valued at $300,000* in year one, and payments valued at $700,000* in year two. This frees up $700,000* in year one to fund the other projects.

*Amounts shown are for illustrative purposes only – financing expenses are not reflected.

Ramped payments are a great solution if you would like to manage cash flow more strategically for large projects by matching payment with deployment and use.

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Peter is responsible for IT asset management at his company where employees are allowed to bring their own devices to work. After much research, Peter has selected Microsoft Intune for managing cross-platform devices and ensuring that his company is compliant from a licensing perspective.

This month, the purchasing department is working with Microsoft to renew the company’s server and CAL products at a cost of $1.5M. Peter is requesting that Microsoft Intune be added to the agreement at an additional cost of $120,000.

However, because this expense was not planned in the last budget cycle, there are currently no funds available this year to cover the additional purchase. Peter’s boss is putting pressure on him to solve the device management problem immediately, so Peter urges the purchasing department to find a solution.

To maximize cash flow over the term of the EA, the purchasing department can finance the $1.5M EA plus the additional $120,000, but defer making any payments until the beginning of the next fiscal year. The purchasing department can then make equal quarterly payments of $135,000*. In addition to allowing Peter to acquire the technology the company needs now, the company can manage cash flow more predictably over the term of the EA. Any additional future True-Up expenses can also easily be rolled into the agreement in successive years.

*Amounts shown are for illustrative purposes only – financing expenses are not reflected

Deferred payments are a great solution if you are facing an unanticipated or unbudgeted expense but need to make the investment immediately.

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Raj is the Chief Technology Officer (CTO) of a large financial services firm. Raj would like to use a portion of his $10M IT budget, to invest $9M to upgrade his Exchange and Windows Server and use Windows Azure for server backup. Just recently, with 2 months left in the company’s fiscal year, the company’s Chief Operating Officer (COO) approached Raj with an imperative to add Office 365 licenses to the deal for an additional $4M to support the company’s mobile team. Raj does not have enough budget left over in this year’s budget to cover this additional expense.

Given that Raj only has $1M left in his budget after spending $9M on his initial IT project, Raj will need to find a way to fund the extra $3M and ideally, seek a quarterly payment option for the new Office license, to accommodate the company’s cash flow policies.

Solution: spread monthly or quarterly payments

Utilizing Microsoft Payment solutions, Raj can utilize a custom payment plan that will allow his company to spread out the $13M total investment over 1-3 years utilizing quarterly payments and defer the first payment for two months, until the next year’s budget is available. This customized payment solution allows Raj to bridge his budget gap and just as importantly, accommodates his business’s IT and financial requirements.

After deferring payments for two months, in year one, Raj will spend $4,333,333* for quarterly payments as illustrated instead of $13M for annual payment. As a result, Raj will underspend his $10M budget this year, which creates an opportunity to add more IT solutions and services that his budget would not have otherwise allowed.

*Amounts shown are for illustrative purposes only – financing expenses are not reflected.

Deferred payments followed by monthly/quarterly payments are a great solution if you need to invest in technology today but don’t have the budget to pay for it this fiscal year.