Some industries are more organically suited to account receivables financing than others, and the wholesale and distribution business is one such industry. Along with the manufacturing industry, these two sectors have a history of factoring receivables going back hundreds of years.
As such, if you are seeking new or ongoing capital for your enterprise, you can have confidence in knowing that wholesale and distribution factoring has long been the preferred financing choice for those in the industry. Business Factors has been offering the accounts receivables financing for those in manufacturing, wholesaling and distributing for more than 15 years. As such it is knowledgeable about the financing processes and procedures of the industry.
Factoring Receivables Is a Natural Fit for Wholesalers and Distributors
Wholesalers and distributors can routinely struggle with cash flow and revenue growth because their businesses are in a constant state of flux. As the middlemen between the product manufacturer and the market reseller, wholesalers and distributors are constantly balancing the needs of their customers and suppliers – all while striving to turn a profit for themselves.
Why Wholesaling and Distributing Factoring? Lets Review These Challenges
- Payment Delays: Long payment windows (+30 days or +60 days) are the norm rather than the exception for the industry. Many wholesale distributors must wait until after the manufactured goods are sold in the market until they collect payment for their role of bring products from manufacturing to marketplace.
- Getting Squeezed: As the go-between, wholesalers and distributors are often squeezed by both their suppliers and customers. Suppliers often demand payment in advance even though their customers tend to pay late. Their position in the supply chain as the go-between gives them little leverage. As such they are often dependent on others for prompt payment. No wonder so many middlemen use wholesale and distributing factoring.
- Overhead: Trucks, drivers, warehouse storage space, shelving, loading and positioning equipment, forklifts, logistics software, and workers are just some of the large expenses those in the wholesale and distribution business face every month. These high expenses generally remain the same even if business is slow.
- Seasonality: Cyclical shifts in business are common for wholesalers, and this can hurt a company’s cash flow and cash reserves. It can be difficult to maintain sufficient working capital during down times in order the fund business operations and growth during busy times.
Wholesale and Distribution Factoring Offers Solutions to Each Common Issue
- Payment Delays: With wholesale and distribution factoring, companies can overcome long payment window problems. By selling their invoice or receivable to Business Factors, companies can collect on their invoices in 3- 5 business days or less. Wholesale distributors no longer have to wait a month or longer to collect on money that is owed to them. This supports their cash flow and ensures sufficient working capital for business operations.
- Getting Squeezed: As the middleman, distributors often must pay their suppliers on the front end even though they don’t collect payment until after their customer gets paid. This puts them in a precarious positon. With wholesale and distribution factoring, businesses can add some much-needed predictability to their outgoing and incoming financials so they can accurately plan for and predict payment collection.
- Overhead: High expenses can be the downfall of many businesses including wholesale distributors. With wholesale and distribution financing from Business Factors, companies can collect on their invoices in days. Regular incoming capital means business can better manage their own expenses, which helps support positive cash flow and control costs.
- Seasonality: Cyclical businesses can often face a double-edge sword when it comes to business financing, and wholesale and distribution factoring helps solve both of these problems. First, wholesale and distribution factoring uses a flexible business models so it is common and acceptable to factor $10,000 in invoices one month and then $200,000 the next. This flexibility helps you get the financing you need to maintain working capital in low and high volume months.
- In addition, many standard financial institutions such as banks won’t offer financing to seasonal businesses as part of their policy. Seasonal businesses are simply seen as too risky or unpredictable. Factoring companies such as Business Factors do provide wholesale and distribution financing to seasonal businesses despite the risks and unpredictability involved. This way wholesale and distribution factoring offers a steady stream of business capital to those businesses that might otherwise have other options.
Factoring Offers Just in Time Financing for Wholesalers and Distributors
So if you’ve been seeking one-time or monthly wholesale and distribution financing for your business, consider Business Factors. They understand the industry and are experienced at handling its common challenges in both the short and long term. With wholesale and distribution factoring, you can manage your financials instead of letting them manage you and get the capital you need to grow your business in 3-5 business days or less.