logo

Products

Distribution Finance

Distribution Finance, also known as Dealer Finance or Channel Finance, is the provision of financing for a seller such as a large manufacturer who extends credit terms to its distributors.

These credit term extensions provide distributors with increased liquidity to bridge their liquidity gap until the receipt of funds from receivables following the sale of goods to a retailer or end-customer.

img

How does it work?

This solution is particularly suited for sellers (i.e. large manufacturers) targeting sales growth and reduced DSO while offering their distributors with extended credit terms as a solution to improve their working capital. Structures can also enable full risk transfer from the seller to the funder.

It reduces the liquidity gap arising between when goods are purchased by distributors and the date they receive funds from end-customers. Allows for the cost of the term extension to be split between large manufacturer and distributors or fully absorbed by either party.

Benefits

Sales growth, risk transfer

Close liquidity gap

Generate fees based on discounts

Reduce DSO and increase sales

Partnership approach

Long term programmatic revenues

Success factors

Should be measured by the capacity of the large manufacturer to meet their finance and sales targets more efficiently to enable sales growth and a measurable return on investment on any subsidy provided.

Cost of Extension

Cost of extension may be fully absorbed by the large manufacturer or split depending on the seller’s goals and profile of the distributors

Flexibility and control

Sellers have the option to extend invoice credit terms on the platform and all the automated tools required for reconciliation

Security

Sellers know that upon the issue of a purchase order capacity has been reserved by the funder to purchase the invoice when goods have been delivered

Thought leadership