When to use inventory financing

When does inventory financing make sense?

Inventory financing makes sense when:

  • when your company enjoys a high inventory turnover rate but is short of the cash needed to replenish its supply,
  • your small business has a warehouse of goods ready to ship, but is short of cash to buy supplies for the next production cycle,
  • when having to maintain high levels of inventory ties up much of your cash.

 

When is inventory financing not advised?

It’s not a good idea when you have either obsolete or hard moving inventory. Why add interest charges to your problems?

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