Benefits of Inventory Financing

Do you manage products and maintain a huge inventory for a retail store? If so, it is important to have cash in hand. As a business owner, you know the importance of meeting customers’ demands. With Accord inventory financing, you can get access to the working capital you need to purchase bigger inventory suppliers. This financing option is also a good option if your business is growing rapidly within a niche sector. 

What is Inventory Financing

Lenders that provide inventor financing will offer funds to businesses that they can use for purchasing necessary inventory. They will set a payment schedule that the borrower should follow. 

 Both small- and medium-sized businesses can use inventory financing. Small businesses turn to this form of financing to cover short-term cash shortages, expand product lines, prepare and stockpile inventory for the busy season, secure upfront cash for keeping up with customers’ demand, as well as unlocking capital tied up in inventory. The inventory a business plans to buy secures the loan. If it cannot make the payments, the lender can seize the unsold stocks to recoup the outstanding amount owed by the borrower. 

Who can Benefit from Inventory Financing?

Every business has different inventory needs. For instance, a business might need to buy a new line of products while another might need funds to cover the costs of raw materials after getting a significant order from a client. Since inventory refers to products, inventory financing will only benefit product-based industries including the following businesses:

  • Retail. Retail stores include department stores with product categories such as clothing, shoes, housewares, jewelry, and beauty products. Inventory financing can also benefit specialty retail stores that specialize in a particular class of products like sports equipment and toys. You can have cash loan Singapore.
  • Wholesalers. These warehouse retailers stock up on a huge variety of products packaged in big quantities and sold at prices lower than retail. Their products tend to move in bulk, so wholesalers require plenty of merchandise to store in their warehouse or other storage facilities.
  • Seasonal businesses. Although these businesses don’t enjoy a steady stream of customers year-round, they experience an influx of product demand during certain seasons like the holidays, summer vacation, the return to school, sporting events, or winter months. 

Inventory financing lets businesses meet customer demand, which is important for their reputation and profitability. Having access to a line of credit or capital dedicate to buying inventory can help ensure the demand of customers is met. Also, with this type of financing, a business does not have to pledge personal assets as collateral.