For distributors · Explainer
How does financing the stock I buy from my anchor actually work?
A financier pays your anchor for your order, the stock comes to you, and you pay the financier on a fixed date, whether or not the stock has sold by then.
In short
- A financier pays your anchor for your stock order, and the stock comes to you.
- You pay the financier on a fixed date, whether or not the stock has sold.
- Your program uses a credit facility or a Shariah-compliant purchase and resale, named before you draw.
Where you sit in the chain
You buy from a larger company (your anchor) and sell on to your own customers. The ceiling on your business is usually not demand and not margin; it is the cash you hold on the day the order has to be paid for.
Buy-side finance moves the payment for that order to a financier, so the order can be larger than the cash in your account today. If instead you sell to the anchor and wait to be paid, you are on the supply side, and a different set of answers applies.
What moves, and in what order
You place a stock order with your anchor. You request financing for it. The financier settles the anchor’s invoice. Your anchor delivers the stock to you. On the repayment date, you pay the financier.
The flow below shows each step, what moves at each one, and who owes the money at the end of it. Read that last line before anything else on this page.
Two structures on one side
Your program uses one of two structures. A conventional distributor facility is a credit facility: you repay the financed amount plus a financing charge on the repayment date. A Shariah-compliant arrangement is a purchase and resale: the financier buys the goods from the anchor, then sells them to you at a disclosed cost-plus price, paid on a deferred date.
They are different contracts with different obligations, and yours is named before you draw. What they share is the part that matters most: under both, you are liable to pay on the agreed date whether or not you have sold the goods.
What does not change
Your anchor still takes your order, still delivers and still invoices. Your trading relationship is the reason the financing exists, and it carries a condition: if you default, your anchor suspends further credit supply until you are current again.
What you see before you commit
Under the documented terms, the screen shows the amount financed, the total repayable, the due date and the effective annualized cost before you confirm, and the request becomes binding when you confirm those terms and the financier accepts.
Treat it as what it is
The repayment date is fixed when you confirm. Selling the stock is your plan for having the cash on that date; it is not a condition of owing it.
Plan each drawing against stock you can sell before the date, not against the limit. First, check whether your anchor is already on the network.
The flow, step by step
- Money moves
- A document moves
- Goods move
- 1.Distributor: You place a stock order with your anchor. (a document moves to anchor.)
- 2.Distributor: You request financing for the order on the platform. (a document moves to financier.)
- 3.Financier: The financier settles the anchor’s invoice. (money moves to anchor.)
- 4.Anchor: Your anchor delivers the stock to you. (goods move to distributor.)
- 5.Distributor: On the repayment date you repay the financier, whether or not the stock has sold. (money moves to financier.)
Who owes the money: Under Distributor finance, you carry the obligation. It is a credit facility to you, with recourse to you, and you repay it. Under Shariah-compliant dealer finance, you owe the agreed price of the goods you bought. You pay the agreed price on the agreed dates. It is a binding obligation: if you pay late, recovery follows documented Sharia principles.
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