Vendor Pre Pay (VPP)

Vendor Prepay is an offering under Supplier Financing Programme “targeted at Big buyer Small seller relationships”; most often evidenced by high volume of small to medium value transactions. The Bank will purchase such receivables from the vendor and prepay them on a without recourse basis. The Bank retains the right to decide which receivables it would like to purchase and 100% financing of the assigned receivable is possible. The primary obligor under this arrangement would continue to be the Buyer and this would mean predicating risk on the payment ability of the Buyer.

Advantages of VPP

For Anchor –

The underlying Anchor needs satisfied by this product are:

• Integrated payment system also supports their supply chain financing needs
• Make supply chain cost competitive by reducing procurement cost
• Resilient supply chain and option to build strategic alliances with suppliers in tough times.
• Increase days payable outstanding; stretch working capital by extending the credit period
• Back end integration

For Spoke -

The underlying Supplier needs are:

• Immediate visibility of approved invoices through Straight2Bank.
• Quicker access to liquidity.
• Reduce default risk in balance sheet
• Localized financing at competitive rates thereby freeing existing credit lines
• Provide working capital support for sales growth