The companies that sell consumer products or dealers sometimes need liquidity to expand their business. Whether it is for the acquisition of new products for your catalog or for a forecast of increased sales, the inventory financing It is a highly requested tool to achieve this.
Do you want to know more about inventory financing? Read on to learn about this tool.
What is inventory financing?
Inventory financing is a financial instrument highly requested by companies of consumable products and dealers who want to get liquid cash for the inventory they have frozen in their warehouses.
The purpose is that companies pawn their products to get liquidity to expand their business.
The entrepreneur obtains a loan for the value of the inventory that he wishes to mobilize. Once those products begin to be sold, the entrepreneur can dDecide between paying part of the loan with the profits that have contributed to the sale of these products, or keep increasing your inventory to market it.
How does inventory financing work?
When a company needs obtain liquidity to expand your business, Request a inventory financing is a very common practice before going to traditional banking.
The operation of this financing tool is nothing more than the obtaining a credit for the value of the inventory or part of it that the company has immobilized in the warehouse and using that money to expand the business (for example, increase the inventory before a forecast of the increase in sales).
When the products begin to be sold, the entrepreneur can choose to either repay part of the loan with his profits or increase the inventory based on the requests of his customers.
When the credit is granted, the creditor signs a contract in which he obtains ownership of the products in stock, as a guarantee in the event that the client cannot meet the payment of the loan. It is a kind of product pawn to avoid a stock break.
Before signing the contract, a verification of the state of the products and that they will be sold at the price stipulated by the market. The loan you will never be able to reach the full inventory price, since many of them (as in the case of dealers) tend to reduce its market value.
During the duration of the contract, it is necessary for the company to carry out a tracking of inventory products, and even the creditor can perform inspections in order to verify that your loan works as stipulated and the value of the products remains the same.
It is also essential present a business project to the creditor to provide information on how the loan is going to be used and how the client plans to repay the money they have been granted.
Inventory financing with Alter Finance
Inventory control and sales forecasting is a very important aspect in companies that sell tangible consumer products. A mismatch can cause numerous problems and stock financing is a tool that helps prevent this from happening.
It is a very efficient alternative to traditional banking, in addition to hiring experts in this field ensures you a good advice on your needs and help to expand your business.
At Alter Finance we offer you our financial advisory service and we help you with the financing of your inventory based on your sales forecast to expand your business.
Contact us without obligation. An advisor from our team will contact you and listen to your needs.