With working capital still difficult to access through traditional channels such as banks and savings & 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 and when should you utilize it? What types of businesses are the best candidates for Inventory Financing? And why? What follows is a brief overview of the basics of Inventory Financing from ExpoCredit, a specialty finance company that provides options for inventory financing and other alternative methods of generating immediate cash flow to boost or sustain growth and meet business goals.
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 Best 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 such as ExpoCredit 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 you 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 funding sources.
At ExpoCredit, our professionals first work with you to provide an estimate of your inventory’s cash worth. Then, based on that estimate, craft an agreement that places the needed capital in your hands quickly.
Additionally, working with its sister company, Storati, ExpoCredit has the ability to purchase your inventory outright, store that inventory in a safe environment and “sell” it back to you when you are ready. This inventory sale with a repurchase option allows you to “liquidate” your inventory while retaining access to your goods. All the logistics for transporting your goods to one of the company’s safe, secure warehouses can be handled for you. Repurchase can be conducted in full or partial lots, and all conditions are negotiated upfront including price and time frame.
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