Is Venndor Financing A Worthwhile In India

1. Vendor Financing Is Worthwhile Idea In India!

3. What Is Vendor financing • Is the lending of money by a business to a customer who then uses that money to buy vendors goods and services. • Also known as a trade credit. • this process may also involve the transfer of shares of the company borrowing the money to the company lending the money. • Vendor financing comes into the use when traditional institutions fail to realize the financial needs of a potential business.

4. Boom Phase • Vendor financing is most used in private equity and came to its peak during the great recession when the cash in the trade market was very low due to difficulty in procuring credits during those harsh days. • To tackle this problem many private equity firms began financing their own buyouts in order to prevent the buyer from borrowing money from banks. • Thus, During that time, the technique of vendor financing started flourishing in the market.

5. Advantages • It helps in the purchase of essential goods and services by the buyer without getting involved in any kinds of loan or offering any kind of collateral. • These kinds of payable financing in Indiaultimately helps in establishing a credit reputation of a business and helps in future bank finances. • Important for a business for procuring WORKING CAPITAL which helps in increasing the revenue. This arrangement is beneficial for both the borrower and the lender.

6. Advantages For Buyers • From the borrower's point of view this is beneficial because he does not have to get involved in the hassle of arranging money to buy the vendors assets. • It saves the interest amount that the borrower has to pay if it would have opted for a financial institution borrowing. The interest is the biggest saving here for the borrower.

7. Advantages For Sellers • From the lender's point of view which is the private equity firm - it is important that someone buys their assets so that they are able to maintain a proper return for their investors. • When there are no buyers the pressure from the investors increases and it becomes really difficult to cope with the situation. • It’s a better way to finance their own buyouts in order to maintain their relationship with the investors.

8. Conclusion • It has proved that it vendor financing is worthwhile & beneficial for the businesses. • Priority Vendor is one of the most renowned names in vendor financing in India which has helped many small businesses in a smoother workflow. It also provides services like supplier finance in India to its clients.