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Questions to ask when thinking about Inventory Financing?

Published on 6th December 2017 - Last update on 8th January 2019

In order to provide the high-quality goods and services that your customers have come to expect, you must ensure quick access to fresh stock, supplies, ingredients and raw materials. This means spending money to replenish your inventory to keep your business moving. But if you’re an SME business working to a budget, getting the goods that you need to operate isn’t always straightforward and can put pressure on your finances. This is why more and more business owners are turning to Inventory Finance for support. With Inventory Finance you can use your existing inventory to receive a line of credit, allowing your business to access an allowance that could be used to acquire more stock, refresh what you’re currently offering or even support your existing cash flow. But before submitting an application, here are some of the questions you need to ask about Inventory Financing.

  • How is Inventory Finance secured?
  • Are there any inventory inspections?
  • How is Inventory Finance repaid?

Is Inventory Finance secured?

Yes. Inventory Finance is a secured asset-based form of business finance that uses stock as collateral. This gives lenders greater confidence to lend to your business and reassures them of your commitment to abiding by the terms outlined in the agreement. But, in the event of nonpayment, this gives lenders the right to seize the contents of your inventory in order to recover the money that they’re owed. However, no other assets, such as equipment, machinery or vehicles, are put at risk.

Need help maintaining your inventory? Finding it difficult to cope with customer demand? Apply for Inventory Finance, or learn more about how your business could benefit.

Are inventory inspections required?

Some lenders may wish to carry out periodic inspections of your inventory, which may be carried out by one of their representatives or another suitably qualified person. As well as assessing the condition and worth of your inventory in order to determine the size of the monthly allowance, they’ll also inspect your sales reports. To do so, they’ll review reports made by your inventory management system, letting them know whether the stock is being sold at a sufficient rate. The requirements for these inspections should be outlined by lenders before entering any agreements, so make sure that you review what’s involved and whether their obligations are too onerous.

How do I repay an Inventory Finance agreement?

Inventory Finance is a short-term business finance product that gives you access to a lender-controlled credit facility. When you withdraw funds from this facility, repayment must be made within 30 – 90 days. Once repaid, you can go on to withdraw these funds and repay them on a cycle. As such, an inventory line of credit works very much like a personal credit card, offering the confidence you need to acquire the stock, supplies, ingredients and raw materials you need for your business.

Need help keeping your stockroom full?

For your business to make money, you often need to spend money first. But that can be easier said than done, especially when it comes to your business’ finances and stock levels. Every day, your customers will be looking to book and purchase a vast range of goods and services. In order to capitalise on the opportunities that may be available, your business must be well stocked and fully prepared. That is why more and more business owners from across a number of different UK sectors are including Inventory Finance in their business plans. So if you need fast access to additional stock or need help supporting your cash flow during slow trading periods, apply for Inventory Finance today, or find out more with Rangewell.

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David Harrison

David Harrison

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