Your corporation carries it. You need to finance it. We’re of course speaking about inventory. Discussions with customers reveal a lot of misconceptions around inventory financing in Canada. Let’s attempt and resolve some of these myths about the financing of your inventory, who the players are, who they are not ( that’s the most widespread myth ) and we’ll also try and supply some straight forward path on next steps in your inventory financing challenge.
The overall quality of your inventory management will play a huge aspect in your potential to finance your items, which are a part of the existing assets component of your balance sheet. You cannot overlook the importance that an inventory lender will place on your potential to report and count your solutions. The reality is that most firms are either carrying a ‘ continuous’ or ‘ ‘periodic’ system of inventory handle.
So here is solid tip # 1 – be conscious that inventory lenders favor a continuous kind of inventory accounting, for all the apparent reasons. Basically you are counting and monitoring inventory (with the use of software of course!) at all occasions. That is a excellent thing when it comes to a lenders valuation on an ongoing basis and their potential to lend.
You’re business is expanding. However so is your inventory! And that places a enormous drain on your money flow. The operating capital cycle dictates that cash turns into inventory which turns into receivables and then we commence all over… that lag can be anyplace from 60 – 120 days, at times longer. Never underestimate the difficulty that higher sales will bring to your inventory financing wants.
Customers generally are hunting for inventory financing because the level of investment that you have in solution and receivables drains your cash flow. As sales volumes raise your cash flow decreases based on your overall collection period of A/R and of course those inventory turns.
Your sales staff of course never wants to be in a position to inform a consumer you don’t have the solution they have worked so difficult to sell.
Does your organization have an inventory financing method? startupguys.net/macropay-reviews of firms we talk to in Canada, definitely in the compact and medium business enterprise sector do not have access to the inventory financing they want. Do accurate inventory financing organizations exist in Canada? We feel that the answer is typically ‘ no ‘, they do not. However if your firm would look at an asset primarily based lending scenario that in impact takes the place of inventory finance firms in Canada.
Beneath an asset based lending tactic your inventory is margined for what its worth, by experts who categorically know what its worth. You will improve your capability to finance your item if you have the controls, reporting, and inventory accounting program in places that tends to make the inventory and asset based lender ‘ comfy ‘.
Speak to a trusted, credible, and knowledgeable company financing advisor with regards to inventory financing corporations and asset based lenders who will give your item the financing it deserves!