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How a Business can Take Advantage of Supplier Finance?

Supplier financing is a kind of trade credit. When your company has to make purchases, you are making order with supplier finance. As soon as the company has received the purchase order, the financing company will extend the credit to you. They will then put a purchase order with the supplier. This is the time when the supplier would handle the order and deliver the goods. The company that does supplier financing on the other hand will make payments to them directly. There’s more info here that you can find which will help you understand it further.

For all the products bought, the company will be sending an invoice by the time they receive the goods. The invoice will include the markup fee for services rendered. Oftentimes, 2 to 3 percent every month will be the markup for every service. Your business is given 1 to 4 months to make payments. If you want to learn how supplier finance works, you can look for more info here.

Supplier financing is catering both small and medium sized businesses as long as they meet eligibility criteria such as be a manufacturer or distributor of goods, a business should be in operation for 3 years, has minimum 2 million dollars annual revenue, have a sound product liability insurance and accurate financial statements.

Whether you believe it or not, this form of financing is more convenient to use in comparison to conventional financing options similar to bank loans given that you meet the requirements asked. Fact is, there’s more info here that can help you out.

Better keep on reading if you want to be mindful of the various benefits that supplier financing can do for a business.

Number 1. Long term payment – the financier will give you up to 4 months to pay back the goods. For majority of businesses, this is enough time to honor their promises without making too much compromise.

Number 2. Direct payment – through supplier financing agreement, the payment can be made straight to the supplier. In business world to which money has a competing needs, making direct payments guarantee that the cash isn’t redirected to other needs of the business. You will be able to more info here.

Number 3. Discounts – you can get discounts from your financier if you were able to make early payments. Here, the money could be used for things that are more valuable for the business.

Number 4. Inventory – you can enable continuity of business and have stable revenue too with supplier finance as you’ll never run out of inventory. You are going to get more info here.