Supplier financing helps companies that have outgrown their existing vendor credit facilities. It is commonly used by manufacturing companies that need to pay for raw materials. It enables you to build inventory, fulfil orders, and grow your company.
The solution provides your company with trade credit, which you can use to purchase raw materials from your vendors. Supplier financing can often work alongside your company’s existing financing.
Commercial Capital is a leading provider of supplier financing in Canada. Complete this form or call us toll-free at (877) 300 3258 for more information.
How does supplier financing work?
Our program is different from conventional supply chain financing lines. The financing company provides you with trade credit and acts as an intermediary between your company and its vendors.
You purchase raw materials on credit by placing an order with the finance company. The finance company buys the goods on your behalf directly from your vendors.
Your vendor delivers the goods to your facility and gets paid by the supplier financing company. Once your vendor fulfils the order, the supplier financing company issues a corresponding invoice to your company.
The transaction settles when you pay the invoice on the agreed terms. To learn more, read “What is Supplier Financing?”
Qualification requirements
The most important criterion to qualify for supplier financing is that your company must be credit insurable (e.g., by Allianz Trade). The trade insurance line enables the finance company to provide you with vendor credit. Additionally, your company must:
- Be a manufacturer or product supplier
- Be based in Canada (or the US)
- Sell a minimum of $2,000,000 per year
- Have at least three (3) years of operations history
- Provide accurate financial statements
- Have product liability insurance
- Have existing and working relationships with suppliers
Compatible with existing financing
Supplier financing is flexible and should be compatible with most financing solutions. The solution does not encumber any assets, so there is no need for an inter-creditor agreement with your existing lender.
However, some lenders may have covenants that prevent you from using this solution. Typically, these covenants include accounts receivable as part of the total debt calculation. Consult your lender if you already have financing and want to deploy supplier financing.
Competitive costs
The cost of supplier financing is determined by the transaction volume and risk. For more information, fill out this form or call us toll-free at (877) 300 3258.
Essential reading
We want to help prospective customers make educated decisions. Commercial Capital has a learning centre with information about trade and supplier financing.