A vendor application is often required before a customer can buy goods or services from a seller, particularly in wholesale sales. The application may ask for banking information or credit references to determine creditworthiness, or a list of vendors the potential distributor is selling for to determine suitability. It may also be requested by a customer to determine a supplier’s financial stability or certification as a small or minority-owned business for government contracts.
Before a vendor sells a good or service to a customer, they may require a vendor application. This form could serve any number of purposes for the seller, but chief among them would be determining whether the customer is an eligible distributor for their product and/or determining whether credit terms should be extended to the customer. Most retail sales don’t require a vendor application, so this article focuses on wholesale sales.
Most manufacturers of any product rely on a network of distributors to market their products. It is likely that those distributors were required to complete a supplier application before they could become an eligible distributor. Depending on the needs of the product manufacturer, the vendor application may ask any number of questions.
If the goal of the vendor application is to find out if a potential distributor is creditworthy, the application may ask for banking information. This would include your bank account number, although the amount of information that can be released by a bank is scarce to none. Conversely, current vendors can offer a lot of information related to a vendor’s account. Therefore, a vendor application may require two or more credit references. These would be companies from which the potential distributor is already buying and therefore could verify the creditworthiness of the potential distributor. Higher credit risks may require payment upfront in advance and, for example, less credit risks could be offered net of 30 or 60 days net to pay the invoice.
If the goal of the vendor application is to find out if a potential distributor is worthy of distribution, the application may ask for a list of vendors that the potential distributor is selling their products for. This will give the seller an idea of the types of products the potential distributor is currently selling and whether new products would be suitable. Some distributors will not allow distributors to sell competing products, so this may also void a supplier application.
In other cases, a vendor application can refer to an application requested by a customer for vendor completion. This could be to find out if a supplier is financially stable before buying from a company. Or it could be finding out if a vendor is certified as a small business, minority-owned, or woman-owned. This is usually for government contracts, where a certain percentage of business must be awarded to companies that supply women-owned, minority-owned or small business products.
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