How supplier payment finance works
Supplier payment finance can help bridge the gap between needing to pay your suppliers and waiting for your own customers to pay you. The lender pays your supplier on your behalf, or provides you with the funds to the supplier yourself. You repay the lender over an agreed term, which is usually between 30 to 120 days, depending on your sales cycle.
A supplier needs paying
You need to pay for stock, materials or services before your own customers have paid you.
Lender pays the supplier
The lender pays your supplier, or provides you with the funds to pay the supplier yourself.
You repay over a short term
You repay the lender over an agreed period, usually 30 to 120 days, depending on your sales cycle.
The cost of funding needs to be weighed against the benefit of paying suppliers on time, avoiding late payment penalties, protecting supplier relationships, or securing stock when your business needs it. Some facilities may also allow you to take advantage of early payment discounts from suppliers, which could offset some or all of the cost of the finance.
When Supplier Finance is particularly useful
Pay suppliers before customers pay you
Useful where there is a timing gap between buying stock or materials and receiving payment from your own customers.
Preserve cash in the business
Helps avoid using cash reserves when a supplier requires payment upfront or on delivery.
Take early payment discounts
May allow you to benefit from supplier discounts without using your own working capital.
Protect supplier relationships
Can help keep suppliers paid on time when strong relationships are critical to the business.
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What to consider
This is a short-term facility and works best when there is a clear and predictable income stream to repay it.
The cost of the finance needs to be weighed against the benefit of paying suppliers on time.
If the underlying issue is that the business is not generating enough income to cover its supplier costs, additional finance will not resolve that.
We will look at the full picture with you before making any recommendations.