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Reasons for Entering into Vendor Financing

What are the benefits of vendor financing and why might it be useful for companies? Read here what our colleague Christian Keufner has to say about it.
Blog Post, Financial Services
23.11.2022, Christian Keufner

Current Situation: Disrupted Supply Chains, Energy Crisis and Inflation

The German economy has gone through challenging times in the past two years and the macroeconomic framework does not appear to be improving in the foreseeable future: Disrupted supply chains are paralyzing industrial production to a considerable extent, energy prices at record levels are driving up producer prices and pushing inflation to around 10% in September 2022 - according to destatis. Consumers are facing an uncertain future against the backdrop of political and economic risks.

Handelsblatt announces that thanks to the strong increase in demand from the single European market of around 23%, orders at German mechanical engineering companies are stagnating and thus the expected significant reduction in orders is not materializing. However, the challenges awaiting Germany as a production location are immense. In addition to disrupted supply chains and rising energy prices, high inflation for the euro zone, falling consumption and political uncertainties also pose problems that make it difficult for machine manufacturers in particular to sell their products as usual, according to VDMA e.V. In order to be securely and broadly positioned in times of economic and political change, it proves worthwhile for companies to offer individual sales financing.

Advantages of Sales Financing

With sales financing, you not only diversify your product portfolio, but you also give your customers the opportunity to make necessary investments despite low liquidity. In view of the current steady rise in energy and raw material prices, this financing instrument offers you scope to manage your sales.

Through individual, customized sales financing, you make it easier for your customer to make a purchase decision, and at the same time, with long-term financing, you lay the foundation for a close customer relationship and advance to become an important component in the financial supply chain of your customers.

Offering the product and financing from a single source also opens up a new customer segment for you: small and medium-sized enterprises with low total assets. With an adapted financing model, you can also handle orders with large investment volumes more efficiently and securely and retain customers in your company for the long term.

A view on the current trends of the financing market suggests a focus on different leasing models. Especially short-term operate leasing models are currently in the foreground and are offered by more and more providers on the market. Thanks to technical progress around Internet-of-Things, in conjunction with modern sensor technology that enables real-time analysis and continuous monitoring of the system, so-called pay-per-use contracts with usage-based pricing are becoming increasingly relevant and widespread. You know your products best and, by offering your own manufacturer financing, you create the framework conditions of a leasing contract whose parameters are tailored to your products and do not leave this field to other players in the finance industry.

Getting Started with Sales Financing: How SCHUMANN Can Support You in this Process

We simplify your entry into sales financing. Our CAM Financial Services Leasing software solution automatically takes over the decision-making process for incoming leasing applications in a matter of seconds - in accordance with your specifications and requirements. Standardized interfaces to a variety of external information service providers allow you to perform risk analysis and assessment and gain insight into the economic situation of your customers. Thanks to the included REST interfaces, CAM Financial Services Leasing can be seamlessly integrated into your existing system landscape. In addition, you also have the option of fully covering automated year-end analyses, reporting and KYC processes in your system via further modules. Thanks to the versatile automation options that CAM Financial Services Leasing brings with it, you can scale your business and have more time for the essential tasks.

Would you like to offer your customers sales financing and efficiently decide on financing applications? Then feel free to contact us at any time! We look forward to working with you to find a solution for your business operations.

About the Author
Christian Keufner

When he joined SCHUMANN, Christian Keufner worked on SCHUMANN solutions for financial statement analysis. Meanwhile, he works as Business Development Manager in Financial Services in Leasing and is responsible for sales and marketing.

In addition to his work at SCHUMANN, he also studied the Master of Science "Taxation". As part of his Master of Science "Sustainable Management & Economics", he intensively works on the topics of sustainability and ESG.

Business Development Manager, SCHUMANN

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