Inventory finance is a type of working capital finance under which businesses with unsold inventory can get access to funds against stock that will be warehoused for a certain period of time before being sold. With inventory finance, small businesses can acquire funds which would otherwise have been stuck in their unsold inventory and use it to pay business expenses or acquire additional inventory. With inventory financing, one can also remove the hassle of negotiating more credit period with suppliers who want to get paid earlier. Under Inventory Finance a buyer or an importer can sell his unsold inventory to a financial institution like Drip Capital. The inventory finance company then transfers 80% of the inventory value to the buyer. The buyer can buy back his inventory as and when he needs it, instead of having his working capital stuck in inventory that he will not immediately sell. Global Trade is one such avenue where working capital efficiency can be marginally improved with inventory finance solutions that improve cash flow for importers. Any buyer or importer engaged in International Trade should explore the benefits of inventory finance for growing their business.
Most buyers or importers buy their inventory in bulk for stock maintenance and to reduce cost. Selling the inventory depends on seasonality and market conditions, which leads to their working capital getting locked in unsold inventory. This causes a cash flow issue which hampers their growth in several ways. The business faces difficulties in meeting business expenses, buying additional inventory, and paying its suppliers. An inventory finance solution that provides access to funds against inventory and the flexibility of buying back inventory when required can help buyers with growing their business without worrying about working capital.
Buyers & Suppliers
We were able to accept more orders from existing customers and also started working with some of the popular retail chains. This meant that we had to keep our cash flow healthier than ever to fulfil this increase in demand. It's a nice problem to have as a growing business and it helps when you have a partner like Drip.
Using our bank lines to pay suppliers while cargo is still on water didn't fit very well with our working capital cycle, and we wish we would've known about Drip earlier. They have been really supportive in our growth and are helping us scale faster through both inventory and supply chain finance.
Drip's credit line and financing process is transparent and works perfectly with our current bank. Thanks to them we are now able to purchase best quality products from reputed suppliers at attractive prices by paying upon shipment. I can now say that we're maximising our cash-conversion cycle in true sense.