Channel partners may be able to get products or services on credit instead of prepaying the entire cost. The credit reduces a channel partner’s overall cost because it is interest-free within the payment terms.
Huawei designates a credit limit and payment terms. The credit limit is a revolving amount for credit sales that Huawei grants to a channel partner, based on Huawei's evaluation of the channel partner. Payment terms are the number of days between invoice date and due date, which is no more than 30 days.
Only distributors and value-added partners can apply for credit. To get credit, a channel partner must provide a copy of the company’s business license, audited financial reports for the previous three consecutive years, and any other materials specified by Huawei.
Along with this information, the channel partner must submit an application for the credit request to the Huawei channel manager. The Huawei channel manager informs the channel partner of the credit decision after Huawei's evaluation.
If the credit requested by the channel partner is not approved, Huawei may ask the channel partner to provide other materials or credit support.
Channel partners can apply for credit limit adjustment at any time. Applicants must provide their latest audited financial reports. Huawei may adjust the credit limit based on comprehensive evaluation of the channel partner's financial position, historical payment records, actual business needs, and other factors.
Huawei may unilaterally adjust or cancel the credit granted to channel partners that have poor payment records, those whose credit has been idle for more than half a year, or partners with credit that has not been fully used.
If a channel partner fails to pay an undisputed invoice by the required date, Huawei is entitled to suspend preparation and shipment of the goods for the channel partner until the overdue Accounts Receivable (AR) amount is cleared. During the overdue period, Huawei will ask the channel partner to prepay transactions.
Inventory/AR Financing Program for Distributors
IBM Global Financing (IGF) is a global IT financing partner that helps clients cost-effectively acquire IT solutions.
Huawei business partners may gain the following benefits from using IGF:
- Increased credit capacity
- Longer payment terms
- Enhanced cash flow
- The ability for distributors to pass on extra payment terms to their second-tier partners
- In accordance with the specific requirements of the IGF, the business partner needs certain credit qualifications.
How IGF financing works
- IGF purchases invoices for approved business partners on a non-recourse basis.
- IGF pays Huawei the full invoice amount on the settlement date (e.g., day 7 from the date of purchased receivables by IGF), and Huawei pays the program fee.
- The Huawei business partner pays IGF the invoice value on the invoice due date (e.g., day 30 from the invoice issuance date). Business partners also may be able to exercise an extended-term option with additional interest charges.
- IGF bears credit and collection risk of business partners.
The IGF financing process includes these steps:
Financing request→Financing department review→IGF approval→Transaction