Businesses need to restock their inventory at times when they need to reduce their per-unit costs. But what happens when the capital gets locked in the inventory? Converting them into liquid assets gets difficult and hence the trades come to a halt. Such situations call for businesses to use inventory financing to purchase products that can be sold. This form of financing is essential for businesses that have been suffering from the economic effects of cash flow fluctuations. Acquiring these finances can help the business scale up its sales volumes and keep extra inventory booked to use on-demand.
What are the features of the financing?
Business development is aided solely by a mobile business cycle of stocks. Inventory financing is the short term business loans that are used to expand inventory. This also initiates healthy sales and here are their certain features:
They are of high values
This inventory is high corpus finances which businesses can use to maintain and expand the inventory in preparation. The upcoming seasonal fluctuations can be controlled with this.
Flexible repayment
These finances are mostly very flexible. The borrower can withdraw only the principal they require from a predetermined credit limit. The financing charges interest only on the sum that is utilized. They can then be repaid in flexible instalments.
Easy collateral advances
These finances can be achieved by keeping the inventory as the collateral itself. Many finances also do not require any collateral or business assets as security.
Quick approval
Unlike traditional loans, these finances do not take a lot of time to get approved. These loans have easy criteria that need to be met and require basic and minimal documentation. With not involving many hassles, the loans are secured almost instantly.
What are the types of inventory financing?
The inventory finances are majorly of 2 types and they are based on the business and the products they offer.
- Inventory loan- These are applied when the businesses need emergency cash flow and want to immediately resell their inventory value. This majorly is a one-time loan offered.
- Inventory line of credit- This is a highly popular source of credit as this ensures more cash flow despite the business has taken an inventory loan. The lender provides ready cash to the business whenever they are in need.
Accord inventory financing is relied upon by every business, medium and small, to help them retrieve themselves out of any sudden cash requirements.
