Factoring receivables is the preferred warehouse funding option
Suppliers and vendors often demand payment on time or even early yet your customers can often take 30, 45, or 60 days to fulfill their payment obligations. This payment scheduling mismatch can put a serious strain on a distributor or wholesaler’s working capital and financials even if they are profitable and generating revenue.
Wholesale and distribution factoring eliminates this common waiting period and enables companies to get paid right away for their receivables. This in turn keeps a company’s cash flow strong so that they can take on new business opportunities as they become available without having to wait.
For seasonal businesses, getting the jump on a new business prospect can be the difference between being in the black and in the red. Having to turn away an order due to lack of capital can harm your bank account as well as your reputation. Capital from wholesale distributor factoring companies means you’ll never have to turn down a large order.
A wholesale distributor factoring company offers cash at the ready
By partnering with a wholesale distributor factoring company, distributors can extend an arm of credit to their existing customers. In strengthening cash flow, distributors or wholesalers can then:
Accept and fulfill larger contracts they might not otherwise be able to handle
Take advantage of discounts with suppliers for early payment
Reduce materials expenses by buying in bulk
Expand by moving into new territories or markets
Lease or purchase new equipment or technologies
Pay down existing bills or expenses
Warehouse funding for ordinary business expenses
While many fast expanding companies seek to take advantage of the power of wholesale and distribution factoring, it can also be used for everyday costs such as payroll, overhead, materials, supplies, and more. In fact many distributors and wholesalers benefit from getting on a regular cycle with wholesale distributor factoring. Doing so enables them to stay a step ahead of bills and expenses and eliminates the worry and insecurity that comes with having to wait on a client for payment.
Factoring receivables is a common form of warehouse funding but other options such as purchase order financing or equipment financing can also be used. P.O. funding enables the verified purchase order to be used as form of collateral so distributors, resellers and wholesalers never have to turn down a massive order due to insufficient working capital. This means as long as you have an order in the pipeline, you can have the capital you need to fulfill and deliver up on that order.
Seasonal businesses can take advantage of warehouse funding
Many wholesale and distribution factoring companies offer flexible terms for their customers as they know the industry tends to be seasonal. Some factoring firms may specialize in manufacturing or wholesale distributor factoring because this finance method has been used in the industry for hundreds of years.
Rates and fees vary with factoring and warehouse funding options. They can range to 80-90 percent of the value of the invoice and lower for higher risk PO funding options. Wholesale and distribution factoring companies make the decision to offer cash based on the creditworthiness of your customers. So as long as they have a record of paying their bills on time, you more than likely qualify for funding.
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