Vendor Finance

What Can it be used for?

As an option available for vendors and suppliers to B2B (business to business) companies. The following products and services can be typically financed.

Product based Vendor Assets

• Vehicles
• Plant & machinery
• Office and finishing equipment
• Computer and server systems
• Software packages
• Printing and photocopiers
• Packaging equipment
• Telecommunication systems

Service Based Vendor Fees

• Accountancy fees
• New Website
• Advertising/Digital marketing packages
• Recruitment fees
• Legal fees
• Graphic Design fees

What is Vendor Finance?

Also known as supplier finance, it is a way for you to provide a flexible option to your customers that allows them to purchase and pay for goods or services over a fixed term rather than paying a one-off purchase price.

The agreement itself will typically be between the lender and your client and will cover the cost of the goods or services you are offering.

Not to be confused with consumer finance it is an option available to any business that works on a B2B basis.

It is available across a range of assets or services such as vehicles or equipment such as computers and printers, office furniture and machinery. Soft assets such as software and CRM platforms, or services such as annual accountants’ fees or subscriptions depending on the circumstances and reputation of the business.

Why Choose Vendor Finance:

Offering your customers, the flexibility to pay for goods or services over a period can add a great deal of value to a business. It can overcome any potential budget and affordability objections your customer may have by allowing them to payback back via affordable monthly repayments.

It also affords you the opportunity to potentially upsell to your customers and increase the value of their order.

One of the biggest benefits this can offer to your business is that you will receive the full value of the sale upfront paid directly to you once the finance has been agreed for your customer. The agreement is between the lender and your customer so you will never have any requirement to chase payment or invoices.

From your customers perspective it allows them to purchase goods or services from you they may not have had the cash available to pay for upfront otherwise. By spreading the cost, it can allow them to alleviate any cashflow issues. Not to mention that finance lease and rentals can also be 100% tax deductible against the profits of a business.

Key Benefits:

• Increase your sales conversion by giving customers an easier way to acquire your goods and services.
• Remove cost or affordability objections your customers may have.
• Upsell opportunity and allows your customers to purchase what they need rather than only what they can afford.
• Removes the risk of your clients defaulting and reduce your debtors if already offering other finance options.
• Improves your cashflow by receiving payment in full along with assisting your customers cashflow by avoiding large cash outlay.

How it works

With Vendor finance you offer your product or service to your customers as you normally would do but with the option for them to spread the cost over a term with fixed monthly payments.

The lender or finance provider will underwrite the application based on the credit score and circumstances of your customers. The application process with typically require a credit check on your customer and they may in some circumstances be required to provide some additional documentation such as proof of ID and address or bank statements. Subject to approval terms will be offered to your customer and they will enter an agreement with the lender. Once this has been agreed the lender will pay the full value or the sale or invoice to you and your client will then make the agreed monthly repayments to the lender.

Some lenders are also able to provide you with an online portal allowing you to white label the finance offering to your clients and allowing you to automate this process which can allow you to get a decision on an application at point of sale in some circumstances.