This post originally appeared on our sister site, Spend Matters. It’s being reposted here because of its high relevance to MetalMiner’s manufacturer users.
Large telecom, computer, equipment and other original equipment manufacturers use a network of both third-party resellers and distributors to sell product in multiple countries.
Many of these local market distributors face cash-flow issues because of lengthy domestic payment terms and limited access to credit facilities or affordable funding. Banks and other lenders can provide direct loans and credit facilities to distributors, backed by varying levels of support and involvement by the corporate OEM.
A healthy dealer and distributor network is important for current and future sales for the OEM. According to one banker, though, a lot of distributors fall into the mid-market segment and, for them, the average cost of credit is high, and they may even find it difficult to arrange a credit line at all.
But Trade Financing Matters (another of our sister properties) sees great potential for cloud-based e-commerce platforms to leverage a seller-centric version of distributor finance in OEM dealer/vendor/distributor structures.
In this arrangement, the OEM functions as the “middle party” working with its dealer/vendor/distributor network and its network of end buyers (or accounts) to manage invoicing, matching, price validation, dispute management, credit and collections, payments to its dealers and collecting receivables from national account customers. Third-party providers may offer risk management or logistics support to broaden such a solution. Read more