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?