Why Would We Implement the Vendor Pay (VP) Program at our Company?
Great question. There are different reasons for each company agenda.
- Profit Center: Often, the Vendor Pay Program may be implemented in a way which allows us to share the vendor discount with you, resulting in your company receiving cash that otherwise would not have been received if your company had paid the invoice in 60 days without help from us.
- Cost/Availability: Some of our clients went to their bank to request a similar program. While the financial institution was willing to execute such a program, there was a substantial cost as well as a decrease in the capitalization ‘availability’ to our client as their financial institution treated the program as a lending line. Our Vendor Pay Program is not by your bank and is at no cost or risk to you.
- Profitability: It is no secret to financial officers that having the use of internal dollars for a longer period of time results in more profits. Example: A company who was paying their vendors in 30 days utilized our Vendor Pay Program to have us pay the vendors in one day. The company then reimbursed us in 60 days, keeping use of their company money for a much longer period of time.
- Diversity: One of our clients has an agenda to increase their list of active “Disadvantaged/MWBE/Small” businesses but didn’t want to change their cash flow management formulas to do so. Many of these small businesses could not afford to do business with our client under ‘Net 10’ terms. Vendor Pay helped them pay their ‘Diversity Vendors’ within one day, resulting in additional bids from minority/disadvantaged firms.
- Care: Many companies simply want to help their vendors. However, while the desire to help is there, it is simply not in the company’s best interest to pay their vendors under the terms of ‘Net 1 Day’ or even ‘Net 30 Days’ in some cases. Therefore, using our money to make payments immediately makes economic sense, especially when you can use our money at no cost to you.
Why Would You ‘Not’ Implement the Vendor Pay (VP) Program?
Great Question. There is no good reason ‘not’ to implement Vendor Pay.
- You can implement Vendor Pay at no cost to your company
- Vendor Pay enhances your profitability and cash flow
- Vendors like doing business with your company because you give them a program they can opt-in to at their discretion in order to be paid immediately
- Vendor Pay is the true Win-Win program for everyone involved – the vendor, your company, and our investors