With working capital still difficult to access through traditional channels such as banks and savings and loans companies, business owners are taking a fresh look at alternative methods of financing. One way to keep operational capital flowing is to evaluate what physical assets your company has on hand that can be easily converted into cash.
Inventory sitting in warehouses, in the back room or on the sales floor waiting to be sold is a useful and important resource that is often overlooked. If your stockpile of commercial merchandise is in good condition and meets other marketplace criteria, you may want to consider inventory financing to meet immediate cash flow needs.
Today, options such as Inventory Financing are becoming more widely leveraged financial tools.
What is Inventory Financing?
Inventory Financing is defined as a form of short-term, asset-based funding that enables you to unlock the dollar value of the inventory your company is holding. Simply stated, your unsold inventory becomes “collateral” for the firm providing the financing for you.
When is it a Good Option?
There are prime times when inventory financing is a smart option for freeing up cash tied up in inventory. For example, when your company is enjoying a high inventory turnover rate, but is short of the cash needed to replenish the supply of existing merchandise or lacking funds to place future orders.
Let’s say you are ready to invest in more inventory, but require additional working capital to pay suppliers or source vendors. If you fail to restock right away, you may be risking customer loyalty, as well as impacting sales volumes. The timing is ideal to add inventory financing to your business strategy.
Who are the Bests Candidates?
As a financial tool, inventory financing is ideal for manufacturers, distributors, and dealers holding large amounts of high-value inventory. This can include automobile dealerships, retailers with luxury or top-of-the-line goods or anyone with substantial funds tied up in physical assets.
Check the inventory you have on hand. Is it in perfect condition and selling well? If your answer is yes, and the merchandise is not in an outdated style or fashion, you are a good candidate. Funding companies are interested in inventory that is current, and with a good track record of sales, or good sales potential.
Why you might want to Leverage this Tool now?
If you are between seasons, preparing to enter new markets or ready to expand globally, chances are your require additional working capital beyond normal operational budgets. Converting static stores of goods into immediate cash flow can take your business to the next level of strategic growth without the documentation hassles, use restrictions and long approval waits inherent in the typical financial transactions available through banks and other traditional sources.
For more details on Inventory Financing, contact Alternative Funding Options.