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Inventory Financing For US

Jul 1, 2022Industry Insights

Inventory Financing for US

The pandemic has forced many businesses to confront the reality of a globalized economy. For the first time, we are seeing the true impact that supply chain disruptions can have on businesses. Inventory financing has become an essential tool for businesses to manage these disruptions and keep their operations running.

Inventory financing is a type of short-term loan that allows businesses to borrow money against their inventory. This can be helpful for businesses that are facing cash flow shortages but still have Inventory levels. Inventory financing can provide the capital needed to maintain operations and weather the storm of a pandemic or other economic disruption.

Shipping inventory to the United States has always been a challenge for businesses. The long distances and different time zones make it difficult to coordinate shipments. The pandemic has made this even more difficult as businesses struggle to keep up with the changing restrictions and regulations. US Inventory financing can help businesses overcome these challenges and get their products to market.

Inventory financing is a critical tool for businesses in the current environment. It can help them weather the storm of a pandemic and maintain their operations. If you are a business owner, make sure you understand how inventory financing works and how it can benefit your business.

Changing Global Order

As the United States trade deficit continues to rise, small and medium-sized businesses (SMBs) may find it difficult to procure inventory to meet customer demand. With China being a key global supplier for the U.S., many businesses are looking for alternatives due to the recent trade tensions between the two countries. However, other markets such as India and Vietnam are starting to see an increase in exports of essential goods. American consumers are also starting to demand more discretionary items, such as apparel and consumer electronics. This means that SMBs who import from these countries may have more bargaining power in the near future as local manufacturing starts to return to normalcy. Inventory financing can be a helpful tool for SMBs during this time of transition. Inventory financing can help businesses free up working capital so that they can take advantage of opportunities in the marketplace and continue to grow their business.

Inventory Financing

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:

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.

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.

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.

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.

Inventory financing can be a great option for SMBs in the US who need access to working capital. By collateralizing their existing inventory, businesses can get the funding they need to grow their business. Keep in mind that inventory financing is aimed at businesses with physical inventory, and most lenders will check your sales performance to determine if you’re eligible for financing. Inventory finance should be used as an add-on or supplement to your business’s primary source of finance, and not as a replacement. In addition, broken supply chains and storage issues can be a concern when it comes to inventory financing. Be sure to partner with a reputable lender who can offer warehouse management services to protect your investment.

Conclusion

Inventory financing can be a useful tool for US importers to access the cash they need to place fresh orders and meet consumer demand. Inventory financing can also help reduce logistics costs and free up additional cash reserves. This could be a crucial factor in helping SMB importers in the US not only recover from the economic slowdown after the pandemic, but also set themselves up for growth in the months to come.

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