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Satisfying customer demand with Inventory Finance

Published on 19th December 2018 - Last update on 1st July 2020

A vital responsibility of being a business owner which cannot be overstated is meeting and satisfying customer demand. However, staying above your minimum inventory levels can be a difficult balancing act to maintain, especially during a busy trading period. Yet, as well as exercising effective management processes and keeping pace with inventory turnover, you also need to ensure that you have enough capital available to replenish spent supplies and stock. But rather than relying on your own savings, you could support your business using Inventory Finance. A secured, short-term form of Asset-Based Lending (ABL), Inventory Financing enables you to raise capital for fresh supplies and stock as and when they’re needed. So what does using Inventory Finance mean for you and your business?

Why is effective inventory management so important?

In order to produce the goods and/or services your customers demand, managing your business’ inventory levels is essential. Naturally, you’ll want to balance between what supplies/stock are entering and being sold, avoiding the accumulation of surplus inventory. But during a busy trading period this balance can shift and result in you selling more than what you can afford to bring in. Should this persist, you may have to turn away customers and risk them approaching your competitors instead - resulting in a loss of potential earnings. However, this is where Inventory Finance can help tip the scales back in your favour.

Is your inventory running low? Need help bringing in fresh supplies as soon as possible? Apply for Inventory Financing and learn more about how your business could benefit.

How does Inventory Finance work?

Inventory Financing provides you with an invaluable means of staying on top of customer demand. Regardless of whether you operate in sectors such as retail, catering, manufacturing or construction, Inventory Finance can offer you access to a Line-of-Credit (LOC) which, in turn, enables you to receive an allowance based upon your current supplies/stock. As such, Inventory Financing releases the capital that you’ve already invested in your current inventory to help replenish your supplies/stock as and when the need arises. Depending on the terms and conditions, such agreements are usually established for up to 30 or 90 days and gradually repaid as inventory is sold. Once the agreement has matured and been repaid, you can begin a new cycle of borrowing, structuring the product much like a Revolving Credit Facility.

What do I need to qualify for Inventory Finance?

For many businesses, the way in which Inventory Finance operates makes it an effective way of acquiring fresh supplies and/or stock without the need to make large upfront payments. As such, it could be a great way of providing your business with the support it needs to manage customer demand. Yet, if you believe that your business stands to benefit, it’s important to acknowledge lender expectations and how they may affect your application.

  • Creditworthiness: One of the biggest benefits of Inventory Financing is that it can accommodate a wide range of financial situations, so possessing an adverse credit rating won’t always lead to your application being rejected. Yet, even so, lenders will still request permission to access your commercial credit profile, incorporating into their checks whether you have any past and/or outstanding CCJs, Accelerated Payment Notices, arrears, unpaid debt (e.g. credit card debt) and your history of resolving debt on time. However, although it won’t always be used against you, it’s worth noting that your business' credit score will directly affect how much interest you’re charged.
  • Security: Inventory Finance is a secured form of Asset-Based Lending that uses your existing inventory as collateral. Although this gives lenders more confidence to offer you an agreement, it also enables lenders to repossess inventory should your business default on the agreement.
  • Documentation: When submitting an application for Inventory Finance, you’ll also need to present lenders with a range of documents as well. This is usually detailed in the paperwork/communications you receive from the lender when making an enquiry, including the appropriate format, but it often includes proof of identity, Profit and Loss reports, sales reports, cashflow forecasts and inventory management reports. As such, in order to avoid unnecessary delays, it's worth getting everything ready beforehand.

In addition, you may have to give lenders a rundown on your inventory management processes, which can be automated using systems such as Fishbowl, Agiliron and TRXio.

Need help satisfying customer demand?

Managing the expectations of your customers can be tiring even at the best of times. Yet, if you’re not keeping a close watch on your inventory and start running out of vital supplies and/or stock, you’ll have no choice but to turn customers away, resulting in a loss of potential earnings and new opportunities for your competitors. But this is where Inventory Financing can help. Releasing the capital tied up in your current inventory, it means you can avoid running out vital supplies when you need them most. All you need to do now is to source a suitable agreement from a lender you can trust, which is where we can help.

At Rangewell, we’re an Access to Finance specialist who’s mapped over 400 different lenders to offer your business an overview of more than 23,000 finance products. Our services are completely free to use and we’ll also guide you through the application process. So if your inventory is running low and needs topping up as soon as possible, apply for Inventory Financing today or find out more with Rangewell.


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David Harrison

David Harrison

Content writer
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