For many manufacturers, wholesalers or retailers, having stock on the floor is what keeps the business running.
Inventory finance is a short-term loan for purchasing stock in advance without tying up all your cash reserves. The products you buy act as the collateral for the loan, so you don’t have to use your assets as security. Then you pay back the lender once the stock is sold.
Inventory finance is a great strategy to preserve cash flow and working capital by allowing you to pay suppliers before you sell the goods. But the bonus lies in being able purchase more stock for your busier times, like Christmas. For anyone with something to sell it can really help boost sales volumes.
These types of loans traditionally are short term with loan time frames being between 30 to 120 days and the rates and fees can be higher, which can impact your margins. Finding a great product and terms to help you achieve your goals is essential. An important thing to remember is that lenders will want evidence of strong sales history and sound credit.