A clear guide for Canadian equipment vendors on how and when you get paid when customers use leasing and financing, plus how to set up clean payout terms.
In Canada, when your customer finances equipment, you still get paid like a normal sale—just not by the customer. Once the deal funds, the lender or leasing company pays you directly, usually by EFT or cheque, based on your invoice.
The timing depends on the structure you agree to with your finance partner:
You don’t wait for monthly payments from the customer. After funding, the credit relationship is between your customer and the lender, not you.
The rest of this guide breaks that down in plain language, from a Canadian dealer’s perspective, with a leasing-first lens.
Key point: A vendor financing program isn’t just about what your customer pays monthly—it’s also about how predictable your cash flow is as a dealer.
A few realities to keep in mind:
So your customers are financing more. The question is: does your payout structure help or hurt your own cash flow?
Working with an independent partner like Mehmi through a structured Vendor Program lets you define how and when you get paid instead of leaving that to chance on every deal.
Key point: You have a sales contract with the customer; the lender has a finance contract with the customer. You get paid by the lender, based on your invoice.
Here’s the simplified flow on a typical lease through a partner like Mehmi:
From your point of view, it looks very similar to a normal sale—except you’re collecting from a finance company instead of the end customer, and funding is tied to specific conditions.
Key point: You can (and should) be clear up front about exactly when you get paid—on delivery, on acceptance, or via some form of pre-funding.
In practice, Canadian equipment vendors usually see four payout patterns.
Payment is triggered once you deliver the equipment and submit:
This is common for:
You still need the lease or finance agreement fully executed, but the customer doesn’t always have to sign a separate “satisfaction” document.
Here, funding only happens once the customer confirms in writing that the equipment is installed and working as promised.
You’ll typically provide:
This is more common when:
A partner like Mehmi will spell this out clearly so your team understands when to expect money on Equipment Leases or Heavy Equipment Financing deals.
In some cases, lenders will release part of the funds before delivery—often to cover deposits you owe upstream to OEMs or for long lead-time items.
Examples:
Pre-funding is usually reserved for:
It needs tight documentation and is more common under a structured Vendor Program or in large Asset Based Lending relationships.
For big, multi-phase installations (production lines, complex plant upgrades), payouts may be tied to milestones:
These are more bespoke and usually involve close coordination between you, Mehmi, and the end customer. They can also be supported by Refinancing or Sales Leaseback structures if the customer wants to pull equity out of existing gear during a long project.
Key point: The biggest driver of payout speed is not the lender’s mood—it’s how complete and clean your funding package is, plus the type of equipment and deal.
Lenders move quickly when the file is “funding-ready.” Common requirements include:
ISED’s Small Business Credit Condition Trends 2014–2024 notes that while approval rates for debt financing remain high (around 89% in 2024), lenders are more careful about documentation and conditions. (ISED Canada)
In other words: the money is there, but lenders expect files to be tight. Mehmi’s internal checklists and the public FAQ page are designed to help you avoid last-minute scrambles.
Rough rule of thumb in the Canadian market:
When you work with Mehmi on Equipment Financing, they’ll help you set realistic expectations by ticket band, so your sales and admin teams aren’t guessing.
Certain categories are “easy sells” for lenders because of strong resale markets:
Other assets might be fundable but slower, especially if they’re specialized or have weak secondary markets. Mehmi’s Eligible Equipment and Industries pages give a good sense of what’s in-bounds.
Lenders care about:
Statistics Canada’s SME survey data shows that while many firms request financing, request rates, approval rates, and typical amounts vary significantly by size and sector. (ISED Canada)
From your side, the key is: once the deal is approved, your payout is about conditions, not the customer’s monthly behaviour.
Key point: Once you know the steps, you can train your team to move files to “funding-ready” faster.
Here’s a typical timeline with an advisor like Mehmi:
Behind the scenes, this is happening in a rate environment where the Bank of Canada’s policy rate is currently 2.25%, following a series of cuts through 2024–25—important context for your customers’ borrowing costs and appetite. (Bank of Canada)
Key point: From your perspective as a vendor, most structures look similar—you invoice, the finance company pays you—but there are a few nuances worth knowing.
This is your bread and butter:
BDC describes vendor leasing as fast and convenient with lower upfront costs, but cautions buyers to understand the terms, because vendor-linked financing can be shorter-term and less flexible than traditional term loans. (BDC.ca)
For you, the main focus is: clear payout timing and a simple documentation checklist, which Mehmi bakes into its Equipment Financing and Vendor Program documentation.
Under an Equipment Line of Credit:
The advantage for you: faster “yes” on repeat buyers, because you aren’t starting from scratch for every purchase.
In Asset Based Lending setups:
ABL is more relevant for larger fleets/plants, but as a vendor you just need to know the facility exists and the funding path is clear.
With Refinancing or Sales Leaseback, there are two common roles you might play:
Sometimes the project only works if the customer has extra cash for:
That’s where Working Capital Loans and Invoice or Freight Factoring come in.
From your angle, these don’t change how you get paid for the equipment—they just help the customer say “yes” without choking their cash flow.
Key point: In a standard non-recourse vendor relationship, once you’ve been funded on a legitimate sale, you’re not responsible for the customer’s future payments.
However, there are a few things to be aware of:
If a funder is asking you for recourse, it should be spelled out clearly and priced into your margin. When Mehmi structures a Vendor Program, a big part of the job is drawing that line properly.
Even in non-recourse structures, you’re still expected to:
BDC’s guidance on vendor financing reminds buyers that vendor-linked financing can be convenient, but they should do due diligence on both the equipment and the financing terms. (BDC.ca)
That due diligence cuts both ways: dealers who stand behind their equipment make life easier for lenders—and in turn get better program terms.
The business
A BC-based material-handling dealer selling:
Before working with Mehmi, their financing approach was loose:
The pain points
Step 1: Clarifying the payout goal
On a planning call, the owner said the real win would be:
“Get paid within 3–5 business days of delivery on most financed deals, without my office chasing everyone.”
Mehmi proposed a simple structure:
Step 2: Building the funding checklist
Together they built a one-page checklist:
Internally, they attached the checklist to their CRM record for any financed deal.
Step 3: Turning it into a vendor program
Mehmi then:
“Most of our clients finance these over 4–5 years. If you’d like, I’ll send you a quick application and we’ll handle everything between your approval and delivery.”
Step 4: The impact over 9 months
After three quarters:
They never became a lender. They just aligned their sales process, admin process, and finance partners so that “customer uses financing” meant “we get paid quickly and predictably.”
You do not wait for customer instalments. Once the finance company approves the deal and funding conditions are met (delivery, acceptance, documentation), the lender or lessor pays you in full based on your invoice. The customer then makes monthly/weekly payments to the lender over the term.
For straightforward deals with complete funding packages, it’s common to see funding in a few business days after the lender receives your invoice and proof of delivery/acceptance. Larger, more complex or custom projects can take longer. National data shows that overall credit approval rates and authorized amounts remain strong, but lenders are more exacting about document quality, which is why a solid checklist matters. (ISED Canada)
In most cases, the lender or leasing company pays you directly. An advisor like Mehmi coordinates structure, approvals, and documentation through its Equipment Financing platform, but the actual funds typically come from the funding institution.
This is where your vendor agreement and documentation process matter. If the customer genuinely hasn’t accepted the equipment (for example, it’s damaged or not as described), funding may be delayed or withheld until the issue is resolved. Once the customer signs an acceptance certificate and you submit a complete funding package, you’re usually protected—especially in non-recourse structures. Mehmi will help you set clean rules via the Vendor Program.
Sometimes lenders will ask for a small discount or participation to hit specific payment or rate targets, especially on promotional programs. In other cases, you’re paid full invoice and the economics are between the lender and the customer. BDC’s guidance on vendor financing urges buyers to compare offers and terms, not just the monthly payment—good advice for vendors too when you’re evaluating program proposals. (BDC.ca) Mehmi’s role is to help you see those trade-offs clearly and keep the structure realistic.
While exact terms depend on the deal and lender, the common pattern through Mehmi is:
For repeat relationships—especially in transport (see Transportation Expertise) and heavy equipment—Mehmi can help set up consistent payout standards so your team knows what to expect on every file. You can explore options starting from the Equipment Financing page or reach out via Contact Us.
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