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What Is a Vendor Application?

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  • Written By: Kathy Heydasch
  • Edited By: O. Wallace
  • Last Modified Date: 16 August 2014
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    Conjecture Corporation
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Before a vendor sells a good or service to a customer, they may require a vendor application. This form might serve any number of purposes for the vendor, but the foremost among them would be determining whether or not the customer is an eligible distributor for their product and/or determining if credit terms should be granted to the customer. Most retail sales do not require a vendor application, so this article focuses on wholesale sales.

Most manufacturers of any product rely on a network of distributors to get their products to market. Chances are those distributors were required to complete a vendor application before they could become an eligible distributor. Depending on the needs of the manufacturer of the product, the vendor application could ask any number of questions.

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If the goal of the vendor application is to find out if a potential distributor is credit-worthy, the application may ask for banking information. This would include the bank’s account number, although the amount of information that can be released from a bank is slim to none. By contrast, current vendors may offer an abundance of information regarding a vendor’s account. So a vendor application might ask for two or more credit references. These would be companies from whom the potential distributor is already buying, and so they could verify the credit-worthiness of the potential distributor. High credit risks may require pre-payment up front and lower credit risks might be offered net 30 or net 60 day terms to pay the invoice, for example.

If the goal of the vendor application is to find out if a potential distributor is worthy of distributorship, the application may ask for a list of suppliers for whom the potential distributor is selling their products. This will give the vendor some idea of the types of products the potential distributor is currently selling and whether or not the new products would be a good fit. Some vendors will not allow distributors to sell competing products, so this could also nullify a vendor application.

In other cases, a vendor application could refer to an application requested by a customer for the vendor to complete. This might be to find out if a vendor is stable financially before purchasing from a company. Or it might be to find 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 granted to companies providing products from woman-owned, minority-owned or small businesses.

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