A vendor is one of the most important elements of a supply chain network. Vendors provide raw materials and services to the manufacturers, thus indirectly having an effect on the end-user’s experience. Small vendors working for larger organizations are often strained for working capital due to standardized payment cycles in certain industries. This means, a vendor might not be getting paid early for early delivery of goods and services, having to wait for the due date for invoice clearance to arrive.
Vendor finance helps resolve this issue by providing early payment to vendors through an alternative financial program. Thus, allowing vendors to expand their operations and service multiple orders at once
Vendor finance is a revolving finance facility which can be availed again and again after every repayment. The finance is secured by collateralizing the invoices for the goods or services sold by the vendor.
Hereby, vendors get access to working capital finance to run critical operations, their commercial partner benefits from a more agile supply chain, and the invoice discounting firm gets interest earnings from the loan.