Forbes article on Inventory Finance.. USA we're coming..14 Sep 2020 00:18
https://www.forbes.com/sites/forbesfinancecouncil/2020/08/03/why-inventory-financing-could-be-crucial-for-us-importers-post-crisis-recovery/#1ef58f7247a0
Key part..
Inventory) Financing American Recovery
Because of the above reasons, U.S. importers may find themselves at a disadvantage when negotiating terms with suppliers, and this could have a negative impact on their finances. However, they can leverage an alternative solution to meet their working capital requirements and forestall any fiscal gaps: inventory financing.
At its core, inventory financing is a form of credit available to businesses by selling goods and products they already have but do not need to sell immediately. By collateralizing their existing inventory, businesses can get access to working capital in hand that they can then use to grow their business.
SMB importers approaching inventory financing should keep in mind the following:
1. Inventory financing is aimed almost exclusively at businesses in the product/merchandise trade space — i.e., businesses with physical inventory. For SMBs in the service sector, inventory financing is unlikely to be of any help.
2. Most lenders will check prior sales performance of businesses to check their viability for inventory finance. Having a strong sales record can help establish credibility, particularly because SMB importers often have poor credit scores, too.
3. Like other alternative finance options, inventory finance is meant to be an add-on or supplement that SMBs can leverage to access working capital in an emergency. Relying on it as a primary source of finance for the business can lead to slower-than-expected growth, because most lenders are unable to provide finance beyond certain limits.
4. Particularly in the wake of Covid-19, broken supply chains could sometimes mean that inventory spends a long time in storage before being shipped to consumers. SMBs may not always be able to manage this stored inventory properly. In such a case, opting for add-on warehouse management offerings provided by many inventory financiers may be a good idea. It costs extra, but offers the assurance that the inventory is taken care of.
By leveraging their existing inventory through third-party inventory financing, U.S. importers can access cash they need to place fresh orders and meet demand from their consumers. Additionally, warehouse management offerings rolled into certain key supply chain finance packages also assist in reducing logistics overheads for SMBs and free up additional cash reserves. This could be a crucial factor toward helping SMB importers in the U.S. not only recover from the economic slowdown after the pandemic, but also set themselves up for growth in the months to come.
Sign In
Follow the stocks
