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Vendor Note

Vendor Note

What is 'Vendor Note'

A type of debt instrument used in a particular type of short-term loan agreement in which the seller of goods or merchandise sells them to the buyer, but also provides financing for the buyer in the form of a vendor note. The loan is secured by the inventory being sold to the buyer as well as pledges of the buyer's business assets and similar forms of security used to help lessen the perceived risk of the buyer's default.

Also known as a seller note.

Explaining 'Vendor Note'

Vendor notes can be a useful and convenient form of financing, particularly when well-established sellers with diverse customer bases are taking on new, smaller buyers who typically have small amounts of working capital with which to purchase inventory. The use of vendor financing can make it easier for a company to increase its sales volume, but in doing so it also incurs the risk of the buyers it finances not paying back their loans.

Vendor notes vary in terms of their time to maturity, but notes with time horizons in the range of three to five years are considered common. Many different types of terms and conditions can be built into a vendor note, such as limitations on the types of business practices the buyer can engage in, restrictions on acquiring other inventory or business assets and requirements that specific financial ratios or benchmarks be maintained.


Further Reading

Enterprise risk management: a DEA VaR approach in vendor selectionEnterprise risk management: a DEA VaR approach in vendor selection
www.tandfonline.com [PDF]
… Value-at-risk (VaR) methods provide a new theoretical tool for financial economics-based ERM (Duffie and … of nine vendors over all 12 criteria given in Figure 1. We note that this … Practical problems of vendor evaluation under risk and uncertainty can be handled by applying our …

Vendor–buyer inventory models with trade credit financing under both non-cooperative and integrated environmentsVendor–buyer inventory models with trade credit financing under both non-cooperative and integrated environments
www.tandfonline.com [PDF]
… Value-at-risk (VaR) methods provide a new theoretical tool for financial economics-based ERM (Duffie and … of nine vendors over all 12 criteria given in Figure 1. We note that this … Practical problems of vendor evaluation under risk and uncertainty can be handled by applying our …

Operational decisions, capital structure, and managerial compensation: A news vendor perspectiveOperational decisions, capital structure, and managerial compensation: A news vendor perspective
www.tandfonline.com [PDF]
… Value-at-risk (VaR) methods provide a new theoretical tool for financial economics-based ERM (Duffie and … of nine vendors over all 12 criteria given in Figure 1. We note that this … Practical problems of vendor evaluation under risk and uncertainty can be handled by applying our …

A note on “Modelling an industrial strategy for inventory management in supply chains: the 'Consignment Stock'case”A note on “Modelling an industrial strategy for inventory management in supply chains: the 'Consignment Stock'case”
www.tandfonline.com [PDF]
… Value-at-risk (VaR) methods provide a new theoretical tool for financial economics-based ERM (Duffie and … of nine vendors over all 12 criteria given in Figure 1. We note that this … Practical problems of vendor evaluation under risk and uncertainty can be handled by applying our …

Vendor-managed inventory with consignment stock agreement for single vendor–single buyer under the emission-trading schemeVendor-managed inventory with consignment stock agreement for single vendor–single buyer under the emission-trading scheme
www.tandfonline.com [PDF]
… Value-at-risk (VaR) methods provide a new theoretical tool for financial economics-based ERM (Duffie and … of nine vendors over all 12 criteria given in Figure 1. We note that this … Practical problems of vendor evaluation under risk and uncertainty can be handled by applying our …

Another look at the single-vendor single-buyer integrated production-inventory problemAnother look at the single-vendor single-buyer integrated production-inventory problem
www.tandfonline.com [PDF]
… Value-at-risk (VaR) methods provide a new theoretical tool for financial economics-based ERM (Duffie and … of nine vendors over all 12 criteria given in Figure 1. We note that this … Practical problems of vendor evaluation under risk and uncertainty can be handled by applying our …

Consignment and vendor managed inventory in single-vendor multiple buyers supply chainsConsignment and vendor managed inventory in single-vendor multiple buyers supply chains
www.tandfonline.com [PDF]
… Value-at-risk (VaR) methods provide a new theoretical tool for financial economics-based ERM (Duffie and … of nine vendors over all 12 criteria given in Figure 1. We note that this … Practical problems of vendor evaluation under risk and uncertainty can be handled by applying our …

Developing economic order quantity model for non-instantaneous deteriorating items in vendor-managed inventory (VMI) systemDeveloping economic order quantity model for non-instantaneous deteriorating items in vendor-managed inventory (VMI) system
www.tandfonline.com [PDF]
… Value-at-risk (VaR) methods provide a new theoretical tool for financial economics-based ERM (Duffie and … of nine vendors over all 12 criteria given in Figure 1. We note that this … Practical problems of vendor evaluation under risk and uncertainty can be handled by applying our …

Note on: An integrated vendor–buyer cooperative inventory model for items with imperfect qualityNote on: An integrated vendor–buyer cooperative inventory model for items with imperfect quality
www.tandfonline.com [PDF]
… Value-at-risk (VaR) methods provide a new theoretical tool for financial economics-based ERM (Duffie and … of nine vendors over all 12 criteria given in Figure 1. We note that this … Practical problems of vendor evaluation under risk and uncertainty can be handled by applying our …


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