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How Vendor Finance Programs Can Boost Your Business Profits

"Chloe Lockard" (2020-08-08)

Vendor Finance is gaining more and more acceptance amongst businesses, especially equipment sellers, as a tool to increase their sales and maximize their profits. A vendor finance program also benefits the purchasers of the equipment since they will be able to obtain their machinery with minimal documentation and without wasting too much time with banks or other financial institutions.

What Is Vendor Financing?

In simple terms, a vendor financing program involves lending money to your customer so that he can purchase your equipment. For example, your prospective customer wishes to purchase $100,000 worth of your equipment. But since he is short of $30,000 cash, he is hesitating in making the purchase. As such, you stand to lose a customer. You can solve this problem by lending him money. You can offer him $30,000 for a suitable interest rate, and he can go ahead and make the purchase.

You can finance such deals either by using your own money or by entering into partnerships with various financial providers.

5 Ways Vendor Financing Benefits Your Business

Vendor financing can positively influence your business in many ways -

• Increased Sales: Vendor financing is a good way to increase the sales of your products. Your salespeople may be doing everything right - identifying prospective clients, arranging a meeting, pitching your product and doing timely follow-ups. But more often than not, the client may drag out the entire process and in the end, refrain from committing to purchase your product. One of the main reasons this happens is that even though the client may be interested in your product, he may not be able to arrange the necessary finance to purchase it. As such, all the efforts of your sales people go to waste and your company suffers from lower sales figures. This problem can be solved through vendor financing. By offering finance together with the product, your sales executives will be able to close sales much faster, bringing you more profits.

  • Edge Out Competition: Suppose you and your competitor are pitching to the same client, 현대 해상 다이렉트 자동차 보험 and he is unable to decide which of you to choose, offering vendor finance can easily tip the balance in your favor. When the prospective client realizes that you will not only provide the product but also the finance to purchase it is sure to give you an incredible edge over your competitor who does not provide vendor financing.
  • Client satisfaction: Your client will also be happy that he does not have to go through heaps of paperwork and waste lots of time trying to meet multiple banks in order to finance the purchase of your product. In contrast, he will easily be able to purchase the product through you with minimal documentation. Not only will the client be happy, but the chances that he will approach you for more equipment in the future are very high.
  • Better Cash Flow: In a traditional sale scenario, you may face difficulties in procuring payments from your customers. They might drag out the payments and may even default. This can significantly affect the cash flow of your business. But vendor financing can solve this issue since the financing company ensures that your receivables are paid off quickly once the sale is done.
  • Receive Interest: Not only will you be able to make more sales and profits through vendor financing, but you will also earn interest on the sale you make. Unlike traditional sales where you receive the money for the sales first hand, in vendor financing you receive the money in installments together with the interest. As such, you will end up making more money for the sale through vendor finance when compared to a direct purchase option.

If you are interested in setting up your own vendor finance program to increase your customer base, you can get in touch with the various financial institutions who do enter into such partnerships. But be sure to do a good checkup on the track record of these institutions to ensure that they do legal and fair business. After all, you obviously don't want to associate with an ill-reputable financial organization and cause problems for you and your customers.

is a national equipment financing & business working capital company provides industry leading finance programs to their customers.