VENDOR FINANCING

Accounts Payable Financing, also known as Vendor Financing, is a relatively new form of credit; similar to Invoice Factoring. Vendor Financing is based on the creditworthiness of the large credit-worthy buyer. Vendor Financing is an excellent source of working capital providing the business owners with increased cash flow to use toward growth/development or reoccurring operational expenses.

Why Is Vendor Financing A Preferred Option?

Vendor Financing is based on establishing a significant relationship between the business owner and various vendors. Computing the cost of Vendor Financing is easy. The business owner will always know the cost of having goods readily available and are not hit with fluctuating charges or high fees if there is an unforeseen delay. Knowing the bottom line enables business owners to allocate the additional capital to grow its operations and free the business from limitations to fill orders.

Vendor Financing also can improve a company’s overall margins. Suppliers often offer a discount or some perk for guaranteed payment. Historically, if a supplier is low on product supply and needs to ration product, suppliers are known to show preference to businesses with a Vendor Financing guarantee.