What is a supplier?

The supplier can be a vehicle dealer selling a car, truck or fleet, an equipment distributor supplying construction, agricultural or medical gear, a manufacturer selling direct, a technology vendor, or a private seller in a second-hand deal. Its involvement starts with the quote, which must specify the asset, price, GST treatment, delivery timeline and any trade-in allowance, because the lender uses it to assess the asset and set the finance amount.

Once finance is approved, the supplier delivers the asset and the borrower signs an acceptance certificate; the lender typically will not release funds until it has. After that, the supplier's warranty terms and service network affect the asset's value and the borrower's ability to maintain it, so lenders prefer assets with strong manufacturer or distributor backing. At the end of a lease, the supplier or its dealer network may handle remarketing, a trade-in or a buy-back; some offer a manufacturer buy-back that supports higher residual values.

Because the asset is the security, the supplier is part of the risk picture. Lenders prefer assets sourced from authorised dealers, distributors or manufacturers; assets from unknown or unverified suppliers attract more scrutiny or a decline, and private sales or overseas purchases usually mean extra checks. They also weigh the asset's expected useful life and the availability of ongoing service and support.

Documentation has to be precise: make, model, serial number, specifications and a price breakdown, since vague invoices slow approvals. The lender needs to know whether the supplier is registered for GST, because that affects the finance structure and tax treatment. And for custom-built equipment paid for by stage payments, the lender wants confidence the supplier can deliver as specified and on time, especially since finance approvals carry expiry dates and a late delivery can mean reapplying or extending the approval.

Two related terms are easy to mix up. Supplier finance (also called supply chain finance or reverse factoring) is a business-to-business arrangement where a lender pays the supplier's invoices early and the buyer repays the lender on extended terms, so the supplier is paid faster and the buyer gets longer to pay.

Vendor finance is where the supplier itself provides credit to the buyer, directly or through a program arranged with a lender. Equipment manufacturers and technology vendors often run these programs, sometimes called sales aid finance, and may subsidise the finance or offer promotional terms to drive sales. Both models tie the supplier more closely into the transaction than a standard purchase, so a subsidised offer from the supplier is worth comparing against what a broker or independent lender can arrange, looking at the total cost rather than the headline.