Two Financing Programs to Solve Distributors Cash Flow Problems

Distributors and Wholesalers Rates Starting At 0.69%
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Distributors factoring
Like any other business, distributors face cash flow problems on a regular basis. This is particularly true for small and start-up companies who have to supply goods to their clients but need to wait for weeks and even months before they collect payments. Cash flow management is particularly important for these entrepreneurs as they also have to ensure that they are liquid enough to pay for their supplies, workers, office rent, utilities and other operating expenses. But how can a distribution firm settle these obligations when it has to wait for months before its clients pay up?


Factoring of Invoices


One way that a distribution firm can solve its cash flow problems is by factoring its invoices. Distributor invoice factoring is a reliable way for enterprises to raise money without falling into debt. In this set-up, a distributor presents its invoices to a third party lender who will pay in advance while holding on to the invoices until the clients pay back. The amount can be as much as 80% of the invoice.


Factoring of invoices presents several benefits to firms in the distribution business. One is the lack of collateral requirements. Firms applying for factoring line won’t have to present real property or vehicle as collateral unlike in a traditional bank loan. Another advantage is the swift processing of the factoring application, which could take a few days or even a couple of hours.


Purchase Order Financing


Another route that distributors can go to is by applying for a purchase order (PO) financing. This facility is ideal for small businesses that have just landed a big contract but lack the money to complete the transaction. In PO financing, a distributor also presents the purchase order of its clients to a lender. In turn, the factoring company will advance the amount indicated in the invoice and remit the remaining amount once the client pays up.  In purchase order financing, the distributor relies on the creditworthiness of its client to be able to access to quick cash for its operational expenses.


Both factoring and PO financing provide a lot of benefits to distribution entities especially those that are just starting to grow their businesses. The first and perhaps most obvious advantage of these financing facilities is the money that enterprises can quickly get. Access to fast cash is essential for any distributor who has numerous bills to pay.


The second advantage is the lack of collateral requirements. Businessmen who are in the distribution sector won’t have to put up their houses or vehicles as collateral when applying for both facilities. Instead, they are only required to show the invoice or purchase order from their clients.


Distributors that need immediate funding for their day-to-day operations can apply for a purchase order financing or invoice factoring. While there are numerous financial companies that offer this type of financing, a wise entrepreneur should approach credible entities like Neebo Capital. We can assure you that your application for a purchase order financing or invoice factoring can be processed in a day or two. We also offer the best rates and flexibility to increase your credit line as needed.