Vendor Finance

Vendor Finance

  • Going deeper to Tier 2/3 vendors by tracking past performance.
  • Broaden availability of the product to BBB or lower rated anchors by capturing anchor sales as a mitigant.

Vendor Finance in the form of receivable discounting or unsecured loans for invoice discounting is a well established product in India. It is largely confined to A+ or better rated companies. This product is a better mitigant against loss due to clear end use supported by sales ledger analysis to prevent misuse. Technology can be a significant enabler of risk mitigation strategies.

What is in it for?

Vendors

  1. Unsecured: Typically Vendors borrow against hard collateral – plant and machinery, land and building and often the promoters personal real estate assets. Vendor finance ( in the form of confirmed payable) allows for an unsecured credit limit linked to the Anchor’s credit.
  2. Lower CoF: Cost of a Vendor finance line is usually borne by the Anchor or adjusted in the unit sale price of supplies. Hence costs tend to be lower than the average cost of finance for a vendor.

Anchors

  1. Helps strengthen the supply chain of an anchor corporate through providing working capital support to small vendors ( read MSME) who are usually un-banked.
  2. Off balance sheet funding without impacting bank borrowings thus helping leverage ratio.
  3. With suitable structure and rating alternate investor segments can be reached for funding diversification and lower cost.

Lenders

  1. Lenders to Anchors usually get paid from post EBITDA Cash flows, while Supply chain Vendor finance gets paid out of the COGS line.
  2. Linking one’s fate to top line items – supplier bills or receivables can improve the access to company’s cash flows and allow for early reductions and exits.

Pre-approved Buyers List

  1. J. P. Morgan Services India Private Limited
  2. J. P. Morgan India Private Limited
  3. CGI
  4. Deloitte
  5. Bank of America
  6. Eclerx
  7. L & T Infotech
  8. Nayara
  9. Amazon Seller service Pvt Ltd
  10. Amazon Transportation Service Pvt Ltd
  11. Accenture Solutions Pvt Ltd
  12. Abbott Healthcare Pvt Ltd
  13. Abbott India Limited
  14. Dell International Services India Pvt Ltd
  15. EMC SOFTWARE AND SERVICES INDIA PVT. LTD.
  16. Jubilant Food Works Limited
  17. Neyveli Lignite Corporation Ltd (NLC India Ltd
  18. NTT DATA Global Delivery Services Private Ltd
  19. NTT Data Information Processing Services Pvt. Ltd
  20. Mahanagar Gas Ltd
  21. Hindalco Industries Ltd
  22. Ultratech Cement Ltd
  23. Mondelez India Ltd
  24. Hindustan Unilever Ltd
  25. Reliance Industries Ltd
  26. Hindustan Unilever Ltd
  27. Britannia Industies Ltd
  28. Flipcart Internet Pvt Ltd
  29. Instakart Services Pvt Ltd
  30. Myntra Design Pvt Ltd
  31. Dabur India Ltd
  32. Tata Power Company Ltd
  33. Tata Consumer Products Ltd
  34. Axis Bank Ltd
  35. ITC Ltd
  36. TATA Motors Ltd
  37. Indian Oil Corporation Limited
  38. HINDUSTAN PETROLEUM CORPORATION LIMITED
  39. CHENNAI PETROLEUM CORPORATION LIMITED
  40. NTPC LIMITED
  41. Dabur India Ltd
  42. LARSEN & TOUBRO LIMITED
  43. Hindustan Aeronautics Ltd
  44. Bharat Petroleum Corporation Limited
  45. Hero Motocorp Limited
  46. Ion Exchange (India) Ltd
  47. JBM Auto Limited
  48. TiTagarh Wagons Limited
  49. Butterly Gandhimathi Appliances Limited
  50. LT Foods Limited
  51. Oil India Limited
  52. Power Grid Corporation of India Limited
  53. Rashtriya Chemicals and Fertilizers Limited
  54. Force Motors Limited

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