Your firm carries it. You need to finance it. We’re of course speaking about inventory. debt cycles with customers reveal a lot of misconceptions around inventory financing in Canada. Let’s attempt and resolve some of these myths about the financing of your inventory, who the players are, who they are not ( that’s the most prevalent myth ) and we’ll also attempt and present some straight forward path on subsequent steps in your inventory financing challenge.

The general top quality of your inventory management will play a massive aspect in your ability to finance your goods, which are a portion of the current assets component of your balance sheet. You can not overlook the significance that an inventory lender will location on your capability to report and count your merchandise. The reality is that most firms are either carrying a ‘ continuous’ or ‘ ‘periodic’ technique of inventory manage.

So here is solid tip # 1 – be aware that inventory lenders favor a continuous type of inventory accounting, for all the apparent motives. Essentially you are counting and monitoring inventory (with the use of software program of course!) at all times. That’s a good issue when it comes to a lenders valuation on an ongoing basis and their ability to lend.

You’re company is developing. Regrettably so is your inventory! And that places a substantial drain on your cash flow. The working capital cycle dictates that cash turns into inventory which turns into receivables and then we commence all over… that lag can be anywhere from 60 – 120 days, occasionally longer. By no means underestimate the difficulty that larger sales will bring to your inventory financing desires.

Clients normally are hunting for inventory financing simply because the level of investment that you have in item and receivables drains your cash flow. As sales volumes improve your money flow decreases primarily based on your all round collection period of A/R and of course those inventory turns.

Your sales employees of course by no means desires to be in a position to tell a consumer you don’t have the item they have worked so really hard to sell.

Does your organization have an inventory financing method? The majority of firms we speak to in Canada, definitely in the smaller and medium small business sector do not have access to the inventory financing they require. Do correct inventory financing firms exist in Canada? We feel that the answer is usually ‘ no ‘, they do not. On the other hand if your firm would take into consideration an asset based lending situation that in impact requires the location of inventory finance companies in Canada.

Beneath an asset primarily based lending method your inventory is margined for what its worth, by professionals who categorically know what its worth. You will improve your ability to finance your product if you have the controls, reporting, and inventory accounting system in locations that tends to make the inventory and asset primarily based lender ‘ comfy ‘.

Speak to a trusted, credible, and knowledgeable small business financing advisor with regards to inventory financing providers and asset based lenders who will give your item the financing it deserves!