The Myth Of Inventory BOAT LOAN COMPANIES

Your company carries it. electronic payment system have to finance it. We’re of course discussing inventory. Discussions with clients reveal lots of misconceptions around inventory financing in Canada. Let’s try to resolve some of those myths around the financing of your inventory, who the players are, who they are not ( that’s the most typical myth ) and we’ll also try and provide some straight forward direction on next steps in your inventory financing challenge.

The overall quality of one’s inventory management will play a large part in your capability to finance your products, which are a part of the current assets element of balance sheet. You cannot overlook the importance that an inventory lender will place on your ability to report and count your products. The reality is that most firms are either carrying a ‘ continuous’ or ‘ ‘periodic’ system of inventory control.

So here’s solid tip # 1# 1 – be aware that inventory lenders prefer a continuing type of inventory accounting, for all the obvious reasons. Essentially you’re counting and monitoring inventory (by using software of course!) at all times. That’s a good thing in terms of a lenders valuation on an ongoing basis and their ability to lend.

You’re company is growing. Unfortunately so can be your inventory! And that places a huge drain on your cash flow. The working capital cycle dictates that cash becomes inventory which becomes receivables and we start all over… that lag can be anywhere from 60 – 120 days, sometimes longer. Never underestimate the problem that higher sales provides to your inventory financing needs.

Clients typically are seeking inventory financing because the degree of investment that you have in product and receivables drains your cash flow. As sales volumes increase your cash flow decreases predicated on your overall collection amount of A/R not to mention those inventory turns.

Your sales staff of course never wants to be in a position to tell a person you don’t have the product they have worked so difficult to sell.

Does your company have a listing financing strategy? The majority of firms we talk to in Canada, certainly in the small and medium business sector don’t have usage of the inventory financing they need. Do true inventory financing companies exist in Canada? We feel that the answer is generally ‘ no ‘, they do not. However if your firm would consider a secured asset based lending scenario that in effect takes the area of inventory boat loan companies in Canada.

Under an asset based lending strategy your inventory is margined for what its worth, by experts who categorically know very well what its worth. You will improve your capability to finance your product if you have the controls, reporting, and inventory accounting system in places which makes the inventory and asset based lender ‘ comfortable ‘.

Speak to a reliable, credible, and experienced business financing advisor with regards to inventory financing companies and asset based lenders who will give your product the financing it deserves!