Guest post by Kickfurther.
Growing your business takes careful planning. If you’re like many small and medium-sized product businesses, allocating financial resources to cover set expenses, investments and finance growth strategies is where creativity and resourcefulness are needed.
Identifying the right resources to fuel your expansion can ensure you get and stay on a growth trajectory. But how do you do this? Business veterans will tell you that hastily selecting partners can set a business back, while avoiding the decision can cause you to miss out on key opportunities for long-term growth. The key to success is to take steps early to put resources in place to support opportunities when they occur.
Inventory financing is a form of short-term loan, line of credit or funding that gives you the cash to pay your suppliers to produce inventory and then uses the inventory as collateral against funding. Lenders in this space include traditional banks, specialist inventory financing companies or online lenders.
It leverages the resources of a financing partner to pay for inventory production, which is one of the largest expenses many brands report. Funding can be customized to address your business’s exact manufacturing, shipping, and sales timelines so that you don’t make a payment on goods until the inventory sells. This works well with natural cashflow cycles.
The products produced typically act as the collateral for the financing, meaning that if the business reports an inability to repay the funding, the inventory can be sold to cover the debt.
Inventory financing is especially valuable to any business experiencing a significant delay between paying for inventory and receiving payment from retailers. It is also helpful for businesses that want to receive volume-based discounts by placing larger orders to support all of their sales channels. This works best when done on a quarterly or other regular basis and can help to prevent the stock-out issues that hinder growth.
Inventory financing may be one of the most powerful tools for any business that deals in large quantities of product. It can be hard to see your cash reserves depleted as you make large purchases of inventory to meet holiday demand or to be a properly supplied wholesaler that is able to keep all of their retailers fully stocked. However, it may be the nature of how your business operates. That is why inventory financing is so important to fill that cash reserve void as you have all your value tied up into inventory. There are many different types of inventory financing. Some may work better than others when it comes to the structure and specifics of your business. Here is a quick breakdown of some of the inventory financing options that you may want to consider for your next loan.
Inventory financing can be a bit more complicated than other types of business financing. The reason being is that you are essentially using your inventory on hand as collateral to secure a loan from a lender. The lender wants to be sure that you are doing everything you can to accurately report the contents of your inventory, and to protect that inventory. Here are some requirements that a lender may ask of a small business looking for inventory financing.
For physical product companies (CPG companies), or those producing shelf-stable consumables, a growth funding option that provides larger amounts than traditional financing and at faster speeds is inventory funding with Kickfurther.
Kickfurther is an inventory funding option, where the manufacturing costs are sent directly to suppliers, and paid back as the inventory sells. This payment system aligns better with natural revenue cycles than does the immediate repayments many traditional and online loans feature. Funding inventory through Kickfurther prevents growing businesses from having to pinch cash on hand and choose between paying for additional inventory or investing in the marketing, equipment, and staff needed to grow.
Kickfurther helps CPG businesses grow faster by funding their inventory and allowing them to pay back later as it sells. Brands have funded over $100M in inventory over the past five years with Kickfurther. Companies selling through any combination of direct-to-consumer, online, wholesale, or retail channels use Kickfurther to fund $20,000-$2,000,000 in inventory they’ll repay on a custom timeline of 1-10 months based on their sales cycles.
Searching for affordable inventory financing? Visit Kickfurther today!