Finance Guide: Stock Finance

Published on 25th April 2016 - Last update on 8th October 2019

Stock Finance (also known as Inventory Finance) is a mechanism which releases working capital from stock such as raw materials or finished goods. The funding works by lenders purchasing stock from a seller on behalf of their buyer. Typically stock finance is structured as a revolving facility over a 30-90 day period which provides flexibility to access cash as and when a business needs it.

A key point to note is that stock finance differs from straight funding of working capital as it is specifically geared to the movement, purchase and/or sale of goods and services. As well as operating domestically, stock finance is also a key product in international trading, with the complexities of cross border transactions such as foreign currencies and exchange risks being handled by instruments such as Bills of Exchange and Letters of Credit.

Security is of the utmost importance in any stock finance transaction and it will often depend on verifiable and secure tracking of physical risks in the events between both parties. Stock in any form can be an expensive commodity which, in certain industries where immediate supply is required, can ultimately lead to a restrictive approach to growth as the more stock is held the less cash there is to operate. As these type of facilities are revolving they will rise and fall in line with movements in your purchase and sales activities .


Making sure you have the right finance for your business is complex and can often be confusing.

There are so many options that can seem very similar, but which when reviewed closely can be very different in terms of monthly payments, overall costs, up-front fees and terms and conditions.

If you’d like to talk to one of our Business Finance Specialists:

Call us on 020 3637 2455

Or email us on [email protected]


Share this article

Discover your range of finance. Every type of finance for every type of business.

Our goal is very simple - to help businesses find the right type of finance as quickly, transparently and painlessly as possible.

Find Funding

Sarah Thornton

Content writer
By using our services, you agree to Rangewell's Cookies Policy.