If you are running a successful small business, there are a number of options available for getting access to cash quickly and easily. Inventory Financing lets you unlock the cash that’s tied up in your physical assets by allowing you to use your existing inventory as a form of credit.
When used in combination with an asset-based loan or invoice factoring, Summit Financial Resources’ Inventory Financing add-on program can significantly expand your working capital. We can loan against a variety of inventory, providing funds for times when your business has a short-term cash flow crunch.
Here are five things to know about Inventory Financing and how it can benefit your small business.
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1 – Inventory Financing leverages the assets you own.
Inventory Financing is a form of asset-based lending that allows your business to leverage the value of the inventory you own. Summit Financial Resources can loan against a variety of stock you have on hand, provided your business has strong sales and a high product turnover rate. This makes our Inventory Financing add-on product an attractive option for manufacturers, distributors, and wholesalers.
2 – Invoice Factoring and Inventory Financing work hand-in-hand.
Inventory Financing is often offered in combination with an invoice factoring line. At Summit Financial Resources, our Inventory Financing add-on program uses your physical inventory in addition to your accounts receivable as collateral. We provide a line of credit, and you pay it back when the inventory is sold through our Invoice Factoring program. Combining both products allows you to use your company’s assets to access significant additional capital.
3 – Funds can be used to cover any business expense.
Fluctuations in cash flow can happen for any number of reasons, from customers who are slow to pay their bills to unexpected business expenses. No matter what the reason for the shortfall, you can use Inventory Financing to access quick cash to bridge the gap in situations such as:
- You have a large, unexpected order for goods that you cannot afford to produce.
- Your seasonal business needs to restock ahead of a sales peak but you’re not currently generating enough cash to cover the expense.
- You need working capital for day-to-day business operations because your cash is tied up in inventory.
- You’re a wholesaler who has the next few months’ orders in the warehouse but little cash on hand to buy additional inventory to meet future demand.
- Your suppliers are not extending as much credit as you need or they are asking for payment in a shorter period of time than it takes to sell your stock to customers.
- You need a reliable funding option that will enable you to take advantage of new business opportunities when they come along.
4 – Consistent turnover is key.
Inventory Finance companies want to be confident that your stock is valuable enough to serve as viable collateral. You must be able to show that existing inventory sells quickly and your products have a history of steady turnover. Make sure your assets are well maintained; lenders typically will not be inclined to take a risk on damaged or outdated products that have been sitting on the shelf.
5 – Maintain accurate records.
It is essential that you maintain up-to-date records in order to provide lenders with an accurate picture of the age, value, and status of your inventory. Make sure you have a good inventory management system in place that allows you to easily track products as they move through your system and view orders to show the inventory is moving quickly. In addition, be careful when buying additional inventory to avoid getting stuck with merchandise that doesn’t sell.
Summit Financial Resources’ Inventory Financing add-on offers a flexible form of small business financing that helps you get your hands on the cash you need when you need it most. By freeing up the funds normally associated with maintaining inventory, you can replenish your stock, manage seasonal dips in business, hire additional workers, or implement that much-needed business expansion.
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Summit Financial Resources specializes in working capital financing for small to medium-sized businesses that need increased cash flow. We provide working capital financing through invoice factoring, asset-based lending, inventory lending, and equipment financing.