Vendor Finance

When a retail company is suffering from falling sales, and a customer cannot afford to pay for goods up-front, the retail company may seek to 'borrow' money from the suppier (or vendor) of the product in order to purchase the product to deliver to the customer. In other words, the supplier is effectively financing the retailer so that the retailer can buy stock from the supplier.

From the suppliers point of view vendor finance allows them to book a sale (even though the actual receipt of money is delayed). Also if this vendor financed sale goes through near the suppliers year end, they will have a higher closing stock value which will boost profits. The risk to the supplier is that if the retailer is needing to borrow money from suppliers, it may be about to go bust.

What to do if you need more help

If you need more help with your specific commercial loan, mortgage or insurance requirement please speak to a professional financial adviser.

We hope you found this information useful.

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