In nearly any business today, payment options are a major consideration for all parties involved. Put simply, everything costs money, and fortunately, many different helpful arrangements for making these payments exist. Business factoring, early payment options, lease to own programs, and more make it easier for any business or individual customer to obtain something that they want and not go bankrupt in the process. Even rent to own furniture or HVAC financing are possible, as some of these items are very important for a household but may be difficult to fully purchase up front. Instead, businesses make use of early payment options, and customers may finance AC repair or replacement in their homes. These sorts of arrangements make otherwise-impossible purchases much easier, and everyone may get what they want. How does this work?
Early Payment Options
A common model of business to business (B2B) purchases is between a supplier and a wholesale buyer. This ranges widely, such as an office buying bulk paper supplies or a department store purchasing clothing in bulk. These large quantities of wholesale goods may be expensive to purchase, and some business customers may want certain arrangements to make this easier. One such arrangement is early payment options, and if early payment options are done right, both parties may expect certain perks from this arrangement.
Put simply, when a business buyer purchases something wholesale from a supplier and uses early payment options, they pay early in exchange for a discount. Business buyers are not expected to ever pay a full price up front, and instead will be sent an invoice for the value of what they purchased. Invoices for goods or services are paid at a later date, and some may be paid 30 to 60 days after the transaction, or even later. But in some cases, the supplier (the seller) may need that money much sooner in order to protect their cash flow, and the buyer may want a discount for that large, expensive purchase. Thus, early payment options may be put to use.
In the case of early cash payments, the buyer will receive a small discount on their purchase, such as 2% or so. In exchange, the buyer will pay for the items they received much sooner than normal, such as within 10 days of the purchase rather than 20 or 30 days. the supplier will appreciate this, since they will not have to wait so long to get their payments. In the case of smaller suppliers, the company may literally not be able to afford to wait 30 or 60 days for that invoice payment. Smaller companies have very limited stockpiles of money, and they may face the risk of going bankrupt while waiting for a payment to be made. That company is bound to have some other expenses of its own to cover. To fix this, early payment options can be used, and that small supplier will get its money much sooner and use it to cover its own expenses before they become too dire. This has the trade-off of losing a small percentage of the invoice’s total value, but in many cases, this may be a fair and sensible trade to make.
Meanwhile, financing options exist for many customers today who are buying expensive and large items or services. This certainly includes cars such as sedans or pickup trucks, as even used cars and trucks are much too expensive for most buyers to fully purchase right away. Instead, a car buyer will make use of on-site financing at a car dealer, and dealers are often connected to as many as five to 10 different money lenders such as banks to make this possible. A customer with a good credit score is more likely to get approved for loans and get lower interest rates, lowering their overall expenses. Something similar may be done when someone approaches mortgage companies in order to get a loan on a house that they want to purchase. The same is true even for smaller purchases, such as hiring HVAC repair experts to replace the home’s old air conditioner with a totally new unit. Large pieces of furniture such as a king sized bed may also be financed from the store mart that offered them.