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Vendor Finance

Vendor finance is a form of lending that allows you to borrow money from a brand (the vendor) to purchase their goods for your retail business. Visit NuORDER to learn the ins and outs of vendor financing.

Vendor financing can give your retail company extra flexibility and improve your cash flow. It can also strengthen your wholesale relationships and help your vendor partners (brands) flourish too. 

Here’s everything you need to know.

What is vendor finance?

Vendor finance (also called “trade credit”) is a form of lending in which a vendor gives a loan to a customer to shop their goods or services, and it’s a common option in B2C and B2B sales alike. In B2C transactions, it might come in the form of a branded credit card from a store. B2B vendor financing usually looks more like classic lending with wholesale customers applying for access to lines of credit. Alternatively, it can appear in the form of an agreement to pay for goods at a later date (e.g. traditional payment terms such as Net 60). Whether vendor financing is for a B2B or B2C customer, the borrower can only use the credit line to buy from that vendor’s inventory or services. 

The approval process for access to credit for inventory is similar to traditional lending, meaning your brand partner will need to assess your creditworthiness, determine risk and consider the history of your relationship. As they assess your shared history, they might consider how reliable, trustworthy and responsible you and your business have been with their company in the past. Unlike where traditional loans are concerned, relationships play a much larger role in vendor finance.

Should you use vendor financing?

There are many instances where vendor financing would be appropriate, and others where it might not be the best solution. You might want to think about the vendor and their products, the financing terms, the impact of those products on your business (such as customer demand), the extent of your business’ outstanding loans and more. 

These are the biggest benefits:

  • Skip the traditional financial institutions
  • Quickly access the inventory you need
  • Increase your cash flow for greater flexibility
  • Build relationships with your favorite vendors

Resolving crises and improving everyday cash flow

Vendor financing can be useful for many reasons, and applying for financing doesn’t mean you don’t have enough capital. One of the most common reasons to turn your vendor into your lender is to simply improve cash flow. Whether you run a brick-and-mortar business, eCommerce or omnichannel, you can have a lot of overhead to cover as a retailer – and that overhead only increases during certain times of the year. When you decide to use a mix of financing and direct purchases across your brand partners, you can improve cash flow to free up buying power for everything from the expenses associated with scaling up to growing your business’ emergency fund for surprise expenses.

Vendor finance can also be a life preserver in a storm. The start and the height of the COVID-19 pandemic offers the perfect example. In the early days, most of the industry faced a crisis. There was a lot of uncertainty and plenty of complex problems to solve – easy answers didn’t exist. 

As a result, many retailers proceeded to cut orders or delay vendor payments. While it did help many stay afloat, it simultaneously created new burdens for vendors, many of which are small or independent. The wholesale relationships that fared best were those that used collaborative approaches instead. They discussed their challenges and figured out new payment terms, delivery dates and other alternatives to meet their unique needs as strategic partners. 

Vendor finance could have also provided a viable solution for some retailers and brands. Those retailers would have had access to the revenue-generating merchandise they needed, while those brands would have been able to move more of their merchandise while taking up the role of a bank. In turn, their collaboration and mutual success would strengthen their relationships, setting the stage to do more great deals together in the future.

Wholesale eCommerce financing solutions

The best wholesale eCommerce platforms make it possible to use vendor financing through their solutions. For example, you can work with your brand partners to establish favorable payment terms and then use NuORDER Payments to put them into action. If it’s decided you’ll pay as the goods are shipped, you can improve your cash flow without doing anything after the initial checkout. When your goods are shipped, your desired payment method will be charged automatically. No extra work for your business or the brand.

You have other financing options with NuORDER Payments too:

  • Major credit cards: Upload your company credit cards to a secure digital wallet with NuORDER Payments. Then pay for any wholesale order via credit card so brands can receive their capital in under 24 hours, while your company enjoys up to 30 days to pay. Credit cards also make it easier to trade with international wholesale partners. 
  • Instant financing: Proceed to checkout as you would with any other order, then ask for instant financing at checkout. In just a few minutes, you’ll find out if you’ve been approved so you can decide how you’d like to proceed. 

Why true wholesale partnerships matter

Financing invites you to become partners with your vendors. When you approach your wholesale relationships through the lens of collaborative commerce, it opens the door to so many possibilities for everyone involved. And it’s not limited to vendor finance alone. Use your B2B eCommerce platform and other digital tools to cultivate stronger relationships with brands.

Here are just a few of the benefits:

  • Increase short-term and long-term revenue
  • Improve experiences for the end customers of your products 
  • Exclusives
  • Special events   
  • Highly-informed product development  
  • Gain a strategic partner to guide each other towards mutual success

Whether through vendor financing or other collaborative means, teaming up with your wholesale partners is in everyone’s interest. 

Learn More

NuORDER is a B2B eCommerce platform and marketplace, connecting retailers and brands and streamlining the wholesale process for virtual, hybrid and in-person market appointments. The NuORDER platform offers a seamless and collaborative way to do business with interactive and customizable solutions, easy payments, real-time inventory insights, comprehensive data and more for increasingly informed buying decisions.

Reimagine Wholesale for Your Business

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NuORDER Team

NuORDER is dedicated to providing thoughtful, informative B2B eCommerce industry insights. Brands use NuORDER's platform to deliver a seamless, more collaborative wholesale process, where buyers can browse products, plan assortments and make smarter buys in real-time.

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Vendor Finance

Posted by NuORDER Team on Jan 20, 2022 10:34:31 AM
NuORDER Team

Vendor financing can give your retail company extra flexibility and improve your cash flow. It can also strengthen your wholesale relationships and help your vendor partners (brands) flourish too. 

Here’s everything you need to know.

What is vendor finance?

Vendor finance (also called “trade credit”) is a form of lending in which a vendor gives a loan to a customer to shop their goods or services, and it’s a common option in B2C and B2B sales alike. In B2C transactions, it might come in the form of a branded credit card from a store. B2B vendor financing usually looks more like classic lending with wholesale customers applying for access to lines of credit. Alternatively, it can appear in the form of an agreement to pay for goods at a later date (e.g. traditional payment terms such as Net 60). Whether vendor financing is for a B2B or B2C customer, the borrower can only use the credit line to buy from that vendor’s inventory or services. 

The approval process for access to credit for inventory is similar to traditional lending, meaning your brand partner will need to assess your creditworthiness, determine risk and consider the history of your relationship. As they assess your shared history, they might consider how reliable, trustworthy and responsible you and your business have been with their company in the past. Unlike where traditional loans are concerned, relationships play a much larger role in vendor finance.

Should you use vendor financing?

There are many instances where vendor financing would be appropriate, and others where it might not be the best solution. You might want to think about the vendor and their products, the financing terms, the impact of those products on your business (such as customer demand), the extent of your business’ outstanding loans and more. 

These are the biggest benefits:

  • Skip the traditional financial institutions
  • Quickly access the inventory you need
  • Increase your cash flow for greater flexibility
  • Build relationships with your favorite vendors

Resolving crises and improving everyday cash flow

Vendor financing can be useful for many reasons, and applying for financing doesn’t mean you don’t have enough capital. One of the most common reasons to turn your vendor into your lender is to simply improve cash flow. Whether you run a brick-and-mortar business, eCommerce or omnichannel, you can have a lot of overhead to cover as a retailer – and that overhead only increases during certain times of the year. When you decide to use a mix of financing and direct purchases across your brand partners, you can improve cash flow to free up buying power for everything from the expenses associated with scaling up to growing your business’ emergency fund for surprise expenses.

Vendor finance can also be a life preserver in a storm. The start and the height of the COVID-19 pandemic offers the perfect example. In the early days, most of the industry faced a crisis. There was a lot of uncertainty and plenty of complex problems to solve – easy answers didn’t exist. 

As a result, many retailers proceeded to cut orders or delay vendor payments. While it did help many stay afloat, it simultaneously created new burdens for vendors, many of which are small or independent. The wholesale relationships that fared best were those that used collaborative approaches instead. They discussed their challenges and figured out new payment terms, delivery dates and other alternatives to meet their unique needs as strategic partners. 

Vendor finance could have also provided a viable solution for some retailers and brands. Those retailers would have had access to the revenue-generating merchandise they needed, while those brands would have been able to move more of their merchandise while taking up the role of a bank. In turn, their collaboration and mutual success would strengthen their relationships, setting the stage to do more great deals together in the future.

Wholesale eCommerce financing solutions

The best wholesale eCommerce platforms make it possible to use vendor financing through their solutions. For example, you can work with your brand partners to establish favorable payment terms and then use NuORDER Payments to put them into action. If it’s decided you’ll pay as the goods are shipped, you can improve your cash flow without doing anything after the initial checkout. When your goods are shipped, your desired payment method will be charged automatically. No extra work for your business or the brand.

You have other financing options with NuORDER Payments too:

  • Major credit cards: Upload your company credit cards to a secure digital wallet with NuORDER Payments. Then pay for any wholesale order via credit card so brands can receive their capital in under 24 hours, while your company enjoys up to 30 days to pay. Credit cards also make it easier to trade with international wholesale partners. 
  • Instant financing: Proceed to checkout as you would with any other order, then ask for instant financing at checkout. In just a few minutes, you’ll find out if you’ve been approved so you can decide how you’d like to proceed. 

Why true wholesale partnerships matter

Financing invites you to become partners with your vendors. When you approach your wholesale relationships through the lens of collaborative commerce, it opens the door to so many possibilities for everyone involved. And it’s not limited to vendor finance alone. Use your B2B eCommerce platform and other digital tools to cultivate stronger relationships with brands.

Here are just a few of the benefits:

  • Increase short-term and long-term revenue
  • Improve experiences for the end customers of your products 
  • Exclusives
  • Special events   
  • Highly-informed product development  
  • Gain a strategic partner to guide each other towards mutual success

Whether through vendor financing or other collaborative means, teaming up with your wholesale partners is in everyone’s interest. 

Learn More

NuORDER is a B2B eCommerce platform and marketplace, connecting retailers and brands and streamlining the wholesale process for virtual, hybrid and in-person market appointments. The NuORDER platform offers a seamless and collaborative way to do business with interactive and customizable solutions, easy payments, real-time inventory insights, comprehensive data and more for increasingly informed buying decisions.

Topics: Brand, Retail, B2B eCommerce, vendor finance