product
Vendor Financing
Vendor financing is credit extended directly by a supplier to a business customer, allowing purchase of goods or services on deferred payment terms.
Definition
What it means.
Vendors extend financing in two forms: trade credit (net-30, net-60, or net-90 payment terms) and installment financing (longer-term payment plans, sometimes with embedded interest). Trade credit is the most common form of vendor financing and is a foundational tool for managing working capital without taking on formal debt.
Vendor accounts paid on time are reported to D&B and build PAYDEX scores. Businesses that consistently leverage vendor net terms and pay early or on time build commercial credit history faster than those who pay cash for everything. For equipment or technology purchases, vendor installment plans often compete favorably with bank financing on rate because the vendor earns a margin on the sale.
Example
A plumbing contractor has a $30,000 pipe and fitting order. The supplier offers net-60 terms: the contractor receives and installs the materials today, collects payment from the property owner, and pays the supplier in 60 days, effectively a 60-day interest-free advance.
Now what?
Get an offer that accounts for vendor financing.
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