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What is a Vendor Finance Scheme, and How is it Operated in the United Kingdom?

Written by: Al Shea

Article Overview: This article explains the basics of what a vendor finance scheme is, how is can benefit you as an equipment supplier, and the reasons behind why a growing number of UK equipment suppliers are now leading with vendor finance schemes to help sell more of their equipment and increase their profits.

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What is a Vendor Finance Scheme, and How is it Operated in the United Kingdom?

Vendor finance is a value-added service offered by finance brokers to suppliers of equipment looking to offer a finance option to their customers. It presents their customers with a simple way to finance the equipment they need for their business todayand lets the equipment supplier keep more control of the whole process.

Maximising your income opportunities and keeping hold of your customer base are of seriously high importance to any business in todays very competitive marketplace. Suppliers offering vendor finance will have the edge over their competition, or at the very least keep up with them, by offering a finance scheme. The broker they choose to operate the finance scheme with will work closely with the supplier of the equipment to update them whenever a customer wants to get out of a lease (ie to upgrade with the competition), or if they are due for an upgrade themselves (a potential new sale) nearer the end of their current lease.

Also, by keeping the finance scheme in house, the supplier has further control of the whole process - the broker can update them on how the finance facilityis coming along, what stage the paperwork is at, when they need to invoice, etc. This is compared to simply allowing the customer to arrange their own finance and then needing to wait for their own funder to sort everything out - which could lead to unnecessary delays in payment being made to the supplier.

Sometimes there is also the option for the supplier to make a small commission on each finance deal their introduce to the broker as part of the scheme, this can make up any loss of profit caused by the supplier giving their customer a cheaper deal, instead they are now building that extra few pounds into the finance side. This is typically done more so in the IT industry where margins are always very tight on the hardware, so for the supplier to make an extra few pounds on the finance deal can sometimes incentivise them enough to begin offering finance options to their customers.

This guide covers vendor finance schemes typically operated in the United Kingdom, it may differ slightly in other countries.

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Article Tags: equipment suppliers, finance scheme, finance schemes, profits, united kingdom, vendor finance

About the Author: Al Shea
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Al Shea started out as a Business Finance Broker in 2002, helping UK businesses source finance for their equipment and asset requirements. Since then he has also gone on to create the popular Consumer Finance website - http://www.HonestJohnny.co.uk - which covers all the latest loans, insurance, credit card, investment, and pension deals currently available in the UK. The website also covers business finance and gives you direct access to Al's existing UK funding lines offering flexible asset finance for your UK business. For a quote go to http://www.HonestJohnny.co.uk/businessfinance

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