Invoice factoring allows distributors to free up the working capital that would otherwise be tied up in their accounts receivable invoices. Instead of waiting for customers to pay, they can receive an advance on their customer’s invoice on the same day it is generated, when they factor it with us.
Capital in hand, distributors are then free to put the money back into growth initiatives; such as:
The same challenges that affect other B2B organizations also drive the need for supply chain finance — having the ability to take on new business, take advantage of manufacturer discounts for large purchases or purchase inventory needed to satisfy larger clients are just a few of the times when a distribution company might be looking for a supply chain finance tool.
Cash flow is critical to every type of business, including U.S. distributors who make it possible for all kinds of goods to get to retail stores, e-commerce retailers and other points of sale.
Similar to other businesses that wait for their customers to pay via accounts receivable invoices, distributors can also experience cash flow challenges that have the ability to derail their growth.
Distributors often extend payment terms to their own customers of 30, 60, 90 days (or even longer). However, these same distributors may be required to pay manufacturers up front, and must bear the cost of transporting goods in advance of customer payment. In many cases distributors are required to pay their suppliers right away, rather than on terms.
This is exactly the type of supply chain finance scenario that makes invoice factoring a useful distributor financing tool!