ICYMI: The ‘Alternative Version’ of Distributor Finance

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There is a major opportunity for cloud-based, e-commerce platforms to leverage seller-centric distributor finance with OEM manufacturers. This ‘alternative version’ of distribution finance is also suitable for many industries, as David Gustin, editor and co-founder of Trade Financing Matters, recently wrote in an article on Spend Matters, OEM Distributor Finance: The Next Frontier. Yet it’s an opportunity too few are taking advantage of.

In the article, Gustin wrote that while banks are seeing growth in distributor finance across many trade flows, many do not have a cloud solution in place to manage the OEM-distributor-end-buyer network. Perhaps it is due to lack of knowledge about this alternative distribution finance option.

Gustin breaks it down: “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.

“This alternative version of distribution finance is suitable for many industries, including automotive, technology, construction, agriculture, healthcare and manufacturing. Yet, despite significant improvements in predictive models based on big data on purchase orders and invoices, distribution finance has not materially evolved in terms of its services, pricing or market participants.”

To find out more on this scenario, check out Gustin’s full article. You can also read a full report on this topic, Distributor Finance – A New Take on an Untapped Market, available for download on Spend Matters.

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