Financing Options for Walmart Suppliers

For many business owners, becoming a Walmart supplier can be a defining moment in their business careers. Walmart’s massive scale, when approached correctly and strategically, can help your business grow exponentially. The bottom line is that Walmart is a great company with stores in the US and Canada (among other countries) and can make for a great client.

While everyone looks at the benefits of dealing with larger orders, they forget that large orders have a potential downside. Large orders can tie up the resources of your company. They can force you to delay supplier payments, or worse – payroll. They can also interfere with your ability to get new business because you lack the resources to service new clients.

The right way to approach this situation is to do so strategically. Have a solid plan to deliver the products and services that your client is buying. Understand the costs of delivering your product and/or services at the scale that large retailers need. Equally important, have a financial plan to cover your expenses while you are waiting for invoice payments.

Walmart payment terms to suppliers

Walmart payment terms vary by supplier. They can range from 30 to 90 days. This payment pattern is common for many large retailers. Actually, it is common for large businesses in all industries. Many well-known brands pay their invoices in 30 to 90 days.

In most cases, there is little you can do about this from a negotiation standpoint. Your client has purchasing power and they use it to their benefit.

However, you do have some control of the situation and can prepare for it. Most suppliers encounter one of two possible problems:

a) You can’t afford to wait 30 to 60 days to get paid

One of the challenges of net-30 to net-90 payment terms is that your company must have the resources to cover its business expenses (payroll, suppliers, etc.) while waiting for an invoice payment. This point is very important. It you don’t have adequate resources, you risk serious financial problems.

b) You have a large order and need funds to prepay your suppliers

Another common problem for vendors is getting a very large order. This scenario can be both a blessing and a curse. The order may be so large that your company lacks the resources to pay its suppliers. Or if it can pay suppliers, it may not be able to cover all the orders from clients. This can happen because funds are tied to slow-paying receivables or because orders have been getting larger and simply exceed the company’s financial capabilities. Regardless, this set of circumstances can result in lost business and, possibly, lost clients.

Supply chain financing options

We offer four comprehensive financing options that can help you deal with larger orders: factoring, purchase order financing, supplier financing, and asset-based financing.

a) Factoring

Factoring your invoices can help improve your cash flow if your main problem is that you can’t afford to wait 30 to 60 days to get paid by the retailer. This problem is common for small and midsize firms that are on a fast growth path.

Invoice factoring works by financing your qualifying invoices that are due from Walmart. We fund the invoice in two installments. The first installment covers up to 85% (this amount varies) of the invoice and is provided as soon as the service or product that you sell has been delivered to Walmart. The remaining 15%, less fees, is rebated once the invoice is paid on its usual schedule. Learn more about factoring here.

b) Purchase order financing

Purchase order (PO) financing can help Walmart suppliers that are selling products and need funds to pay their suppliers. It helps companies that need funds to pay their local or overseas suppliers (e.g., China) so that they can fulfill a large purchase order. Note that purchase order financing cannot be used by manufacturing companies directly. It can be used only by product re-sellers.

When used correctly, PO financing can help your company deliver larger orders and grow. Qualification requirements include:

  • Gross margins of 25% or higher
  • A single supplier produces the end product
  • Your supplier must be willing to accept payment by letter of credit
  • The order must be for at least $100,000

Note that most purchase order financing lines are also combined with a factoring facility. Learn more about PO financing here.

c) Supplier financing

Supplier financing is a solution that can be used by both manufacturing companies and companies that re-sell products. It provides them with the means to buy raw materials (or finished goods) so they can fulfill large orders or build inventory.

Unlike most supply chain financing options, supplier financing is compatible with existing financing solutions. It can be used to extend your existing financial capabilities.

To qualify, your company must:

  • Manufacture or distribute products
  • Have annual revenues of at least $2,000,000
  • Have at least 3 years of operational history
  • Be credit insurable

Learn more about qualification requirements.

d) Asset-based financing

Asset-based financing is a financing solution for midsize and larger companies that have outgrown their factoring relationship but are not able to get a conventional business line of credit. It allows you to finance company assets by using different funding structures.

Accounts receivable and inventory can be financed using a structure that resembles a line of credit. Equipment and similar assets can be funded using an installment loan term structure. Asset-based financing can also be used with PO financing and supplier financing to handle large orders. Learn more here.

Be careful of guaranteed sale terms

Every so often, vendor contracts will have a guaranteed sale clause. This clause can prevent you from getting most funding (except supplier financing).

A guaranteed sale clause states that your client can return goods that are unsold. Usually, these unsold goods are charged back to the invoice, reducing the payment value. The problem with guaranteed sale terms is that you never know when chargebacks are going to happen – nor do you know their dollar value. This uncertainty prevents the financing company from using your invoices as collateral since their value is uncertain.

Consider negotiating an alternative solution that works for both you and your client. In some cases, the amount of a chargeback can be negotiated not to exceed a certain value/percentage.

Looking for a financing quote?

We are a leading provider of factoring, purchase order financing, supplier financing, and asset-based financing and can work with Walmart suppliers. For a quote, fill out this form or call us toll-free at (877) 300 3258.


Disclaimer: We are not associated with Walmart in any way. We are a private finance company that can offer financing to qualifying Walmart suppliers. This page is provided for informational purposes only. Consult a qualified financial expert if you need advice. We are not a part of the Walmart Supplier Alliance.