What is Vendor Finance?

If you are an equipment or technology solutions provider, you’ve probably come across the term Vendor Finance. The meaning however is very much perceived differently depending on which finance solution you use. Here, we’ll explain the definition of Vendor Finance, the Lease Group way.

OK, so you run an equipment or technology business. You may be a provider of telecoms equipment, IT solutions or even office furniture. But what happens when a business customer cannot afford the upfront cost or insists on utilising their operating budget for the solutions you provide? This is where Vendor Finance comes in.

Vendor Finance is quite simply the process of leveraging third-party funds to make a monthly repayment possible.

We’ve all been there. Your equipment or technology solution looks great, but what about the payment options – are they so strong? What if a £10,000 outlay on equipment isn’t within the means of a business looking to invest their hard-earned profits in activities that enable them to grow – such as sales and marketing?

Many Vendors lose out on sales due to not being able to offer a flexible repayment option – and just as many are not in a position to make an affordable repayment possible with in-house funds.

This is where Vendor Finance comes in.

Vendor Finance is called upon in such times of need, to offer customers a flexible repayment on products and services where a capital budget is null and void or where a vendor-side payment option cannot be considered.

Suppliers use Vendor Finance, professionally delivered by the likes of Lease Group, to offer monthly or quarterly repayments on products and services in return for a credit check on the financials of the applying company.

Once the sale of goods has been agreed by the supplier and customer, the Vendor Finance process typically involves a brief inspection on the customer’s financials to determine whether or not the business can afford the repayments. This process can take as little as 5 minutes and leaves no footprint on the customer’s credit profile.

Once all checks are carried out – a finance contract is served, which the customer signs.

Upon the signing of the contract, the Vendor Finance company instructs the supplier to provide the goods and execute any associated installations – making sure the solution is in situ and in proper working order.

The latter stage of the process is to make timely payment to the supplier for the full invoice value of the sale – once this is complete, the customer begins their repayment plan – for the duration of the contract.

Fortunately – the entire process of quoting, applying for finance, and receiving invoice payment is made quick and painless by the Vendor Finance company – but many suppliers have mixed views as to how quick and painless this actually is.

Companies like Lease Group provide suppliers with online tools that ease and speed up the process, making Vendor Finance a pivotal part of the sales journey – and one that delivers time and time again to bring goods and services to customers with minimal impact on cash-flow, SLA’s or invoice payment.