Inventory Financing

Amid an uncertain economy, small to mid-sized businesses are prone to struggle with uneven cash flow, making it extra challenging to grow the business.

Many companies are forced to pass on opportunities because of insufficient cash flow or the lack of access to a source of capital.

It has always been complicated for businesses to qualify for conventional bank loans, and since the financial crisis, it has become practically impossible. The good news is that alternative lenders have been quick to fill the hole left by banks, providing companies with cost-effective and conveniently accessible solutions such as inventory financing.

How Inventory Financing Works

Inventory financing works by leveraging a company’s inventory to generate immediate and ongoing cash flow while it sits on the shelves, waiting to be sold. It’s typically set up as a revolving credit line that allows your company to draw fund requests as needed. Once inventory is sold, the proceeds will be used to pay the lender, who will then remit the balance owed to the company (less applicable fees). 

The company can continue to request funding from its credit line as inventory is added. The credit line correlates to the amount of inventory on hand, which might increase or be reduced based on customer orders.

You can use the funds from inventory financing for almost any business purpose, such as inventory purchases, equipment purchases, and more. 

Generally, the industries that use inventory financing are distributors, wholesalers, and manufacturing companies.

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Industries that Benefit from Inventory Financing

All industries can benefit from inventory financing in some capacity. However, these businesses stand out from the rest

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Wholesalers

You’ll need to have an inventory to sell wholesale goods to your clients. Through inventory financing, you can ensure enough inventory is available for whatever items you need to have in stock.

Retail Stores

You might be selling items, such as toys, clothing, and other household items, among other types of inventory in your retail business. You can purchase a larger amount of these items through inventory financing. You can even offer new products or prepare for busy seasons.

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Restaurants

Inventory such as ingredients for your dishes, silverware, linens, and other items are required to run your restaurant. You can pay for these expenses while still meeting your other needs with inventory financing.

Working with Invoice Financing USA

Since inventory financing is generally more complex than other financing options, it requires more diligence from all parties involved. Part of the process is reviewing your inventory along with your company’s facilities. 

We also pay particular attention to your company’s inventory and accounting system to ensure you meet minimum standards. 

Does your business rely on inventory? Get in touch with us today to know more about our inventory financing rates.