You too could set up a vendor financing solution. Are you an industrial company with leasing requests, but you are neither financially equipped nor have the management tools to create a leasing offer for your customers? Or you are a young and innovative service company with assets but in your tech ecosystem Capex financing is not developed?
Today, the trend in the industrial world is to move towards more servicization. Indeed, B2B customers are currently looking for use rather than possession of equipment. Did you know that in the automotive industry in France, leasing and subscription represented 11% of sales in 2012, and by 2021 it will be 82%.
To meet this need, Chetwode has just created a new subsidiary, Chetwode 360, to help manufacturers integrate an “Equipment-as-a-service” offer.
Hadrien Berger, Chetwode 360 manager, newly appointed to develop the subsidiary, explains in this article the benefits of vendor financing and how Chetwode 360 can help manufacturers with this new activity.
Vendor financing covers all the tools that enable manufacturers to help their customers finance their purchases, e.g. captive finance, sale and leaseback, leasing in general, rental, equipment-as-a-service offers.
First of all, we find needs among traditional industrial companies that are not equipped to respond to rental requests. They are not structured internally in terms of tools, do not have the right sources of financing and do not have the expertise to manage this rental or leasing offer for their customers. With the launch of the Chetwode 360 subsidiary, we support industrial companies in the structuring, financing and management of their leasing offer.
And in the second stage, we see young and innovative companies offering a service based on the provision of assets. In the tech ecosystem, the financing of equipment capex is not developed or even feared. With the launch of the Chetwode 360 subsidiary, we are helping these companies to structure the financing of their Capex in their “equipment-as-a-service” offer.
All industrial companies linked to the manufacture or operation of industrial equipment (robot manufacturers, logistics equipment installers, tracking companies, flight simulator operators, agricultural equipment distributors, production equipment brokers) are concerned by vendor financing.
These industrial companies may ask themselves at some point in their development: can I vertically integrate and offer my customers additional services around the equipment? Or can I become a service company that uses industrial assets to deliver this service?
Associated services can be :
Chetwode has launched Chetwode 360 to assist manufacturers in the implementation of vendor finance offers. These manufacturers do not necessarily have the experience, skills or money to launch these offers, which are intensive and require a lot of attention and management.
We used to buy software for life and install it on the computer, now we will more naturally turn to an online subscription.
This trend is coming to the equipment sector. It is called “Equipment-as-a-service”.
This transition is very marked in the automotive sector. Several offers are proposed such as rental with purchase option, short term rental, car sharing, subscription… Car manufacturers are becoming mobility service providers. Today, all car manufacturers have created a dedicated subsidiary: “captives”.
This trend is not confined to the automotive industry alone, since almost all equipment sectors are concerned: mobility, robotics, logistics, aviation, rail, maritime, audiovisual, construction, and many others!
All the players in these sectors must ask themselves the question: should they be part of this transition to service or should they retain the old production-sales model?
First of all, there are many benefits for vendors:
But vendor finance primarily meets the needs of buyers:
Chetwode launches Chetwode 360 because the activity is different from Chetwode’s historical activity. This one concerns longer projects (several months) with a large dimension of structuring advice.
The Chetwode offer includes a 3-phase support:
Firstly, we work with several alternative sources of finance for the assembly of your financial project and we are independent, which allows us to search for the optimal solution available on the finance market.
Secondly, we offer real industrial consultancy support, unlike other players. We are experts in vendor finance (risk management, working capital management). We advise on financial, legal and tax structuring.
In addition, we set up international vendor programs (EU and China, USA) whereas most organisations offer country-specific agreements.
We have an inventory finance offering at Chetwode, which allows us to provide an optimised financial solution for your supply chain from manufacturing to leasing for your vendor program.
To illustrate Chetwode 360’s support, here are 3 cases we have worked on:
In conclusion, you, as industrial companies, are experts in your sector but you may find yourself at a loss when your customers ask you for financing, leasing, underwriting. You may not have the opportunity to structure an equipment-as-a-service business at present.
We can help you set up the right service programmes.
Contact us if you have any questions about our offer.
Hadrien Berger is a graduate of Neoma Business School and holds a CFA and an international financial analyst certification. Hadrien has worked for various financial institutions such as Natixis Investment Managers and for Flexam Invest (an investment fund where he worked with Dan Pelta). Together, they have carried out the structuring of industrial equipment financing worth several hundred million euros. He is also the creator of the website www.leasopedia.com. Hadrien joined Chetwode to structure and develop the Chetwode 360 subsidiary with Dan Pelta.