All you need to know about Channel Dealer Financing

Land, Machinery, Infrastructure – check. Need capital for growth? Solution lies in Channel Dealer Financing. Bid farewell to waiting long periods of time and missing the punch that your business requires. Smarter, faster, hassle-free, customer friendly financing is waiting to be availed.

Channel Financing is a short-term working capital facility provided by the bank to the dealers or suppliers to sustain a seamless workflow of business, to meet the need of working capital, or to avoid any difficulties in the payments of their dues.

Why Channel Dealer Financing?

  1. It ensures that there is a flawless flow of working capital and your business runs without a glitch.
  2. The cost of cash flow is reduced as there is a linkage between the sellers and buyers. The borrower’s balance sheet is not the only consideration while underwriting the loan.
  3. As the buyers pay for the inventory after it has been converted to cash, there is better cashflow.
  4. It ensures a steady growth while the current business remains steady.

Channel financing is needed when a supplier or a distributor is not in a situation to fulfil the working capital needs from the cash flows. The primary goal of channel financing (or dealer financing) is to empower manufacturing and trading companies to offer to their dealers, distributors on a cash basis and settle the debts.

Benefits of Channel Financing

  1. Quicker Realization of Money: The channel dealers provide the payment in a relatively shorter span of time. It is possible to streamline the seller’s point of sale system to speed up the process.
  2. Better Credit and Collection: When the responsibility of the credit validity is taken up by the provider, receiving the payments and the dues become easier.
  3. Lesser Administrative Costs: As the finance provider works as middleman assuming the risk management, the sellers can optimize their employee engagement.
  4. Improved Customer Relations: The disputes and payment issues are dealt with by the provider, thus harmonizing the seller and buyer.
  5. More Visibility: The transparency of incoming and outgoing payments affords better visibility and knowledge about the stability and credibility of the borrower.
  6. Paper work and manual processes eliminated: As all the records are automated, the risk of human error is minimal while saving the man hours.

Opportunities of Channel Financing

  1. The loan term is flexible as it provides more liquidity to dealers and has no minimum withdrawal constraint.
  2. Availability of instant funds for faster business growth.
  3. Simple procedure of fund procurement without much documentation requirements.

Key Highlights

  • Channel Finance Limits from ₹50,000 – ₹5 Crores
  • Channel Financing tenure is up to 90 months
  • Rate of interest in from 9% p.a

 

Business-to-Business model of business has its fair share of complexity which gets eliminated with the advent of channel finance. This enables the businesses to concentrate on their business growth through an increase in inventory, inflow of new clients or a smarter running of operations. The business house can work on enriching its core services areas or the product line as they have the available working capital. It simplifies the process of forecasting expenditures. Channel financing promises businesses the support of a reliable financial system.

Getting channel/dealer financing is an easy and simple process. The documentation requires less time as you can fill the form beforehand on the dealers’ website and it needs fewer documents like a driving license and proof of your fixed and regular income and just might check your credit history before approving your finance.

Capital 9 experts are actively available for providing you with professional guidance and to help you apply for such loans.

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