It is no secret that many small to midsize businesses have been hit especially hard by the COVID-19 pandemic.
If you are a distributor, bringing in enough inventory to meet the demand of your customers is always a challenge – especially since the banks don’t like inventory financing when the revenue from the sale of said inventory may not come into your account for weeks or months.
Distributors always need to plan and place their orders with their manufacturers to ensure they have appropriate lead times so that their orders are delivered on time. Even more so now!
Stocking up with inventory takes money – and distributors need to solve the problems of what type of funding to get and where to get that funding from.
If your bank won’t provide the funding and you don’t have sufficient cash reserves, we recommend sourcing purchase order financing and accounts receivable financing.
Purchase Order Financing
Purchase Order Financing is a good option for companies who have the opportunity to take on more business but who do not have the financial liquidity to fill orders. PO financing is a short-term loan that gives businesses the money they need to pay their suppliers the up-front deposits that their suppliers require in order to commence production of the orders.
This type of commercial loan is ideal for both new and expanding businesses and it is ideal for distributors with firm purchase orders from their customers that they can use as security.
Accounts Receivable Financing
Accounts Receivable Financing is either a line of credit margined against existing receivables or a factoring facility which, in effect, is the pledge of customer invoices to a factoring company in return for a loan equal to a percentage of the value of the invoice. In either case, access to the funds is immediate and provides the flexibility for the distributor to allow its customers to take time to pay.
Let us help you keep your business running
For distributors to survive this pandemic, they must get ready for the holiday season now – and for that, they will need the appropriate financing for their businesses.
At CORFinancial, we can help you continue to run your business by ensuring that you have the financing you need when you need it.
To learn more about or apply for purchase order financing, accounts receivable financing, or any of the other loan options that we offer, contact us today to speak with a member of our team.