Your company takes it. You need to finance it. We certainly talk about inventory. Discussions with clients revealed many misunderstandings around inventory financing in Canada. Let’s try and finish some of the myths around your inventory financing, who the players are, who they don’t (are the most common myths) and we will also try and provide some straight directions to the next steps in financing your inventory challenges.
The overall quality of your inventory management will play mostly in your ability to finance your product, which is part of the current asset component of your balance sheet. You cannot ignore the importance that inventory lenders will place your ability to report and calculate your product. The reality is that most companies carry ‘continuous’ or ‘periodic’ inventory control systems.
So here is a solid tip # 1 – Know that inventory lenders prefer the type of continuous inventory accounting, for all clear reasons. Basically you count and monitor inventory (with the use of software of course!) Every time. It’s a good thing when it comes to a sustainable lender assessment and their ability to lend.
Your company is growing. Unfortunately, so is your inventory! And it puts a big drain on your cash flow. The working capital cycle determines that cash turns into an inventory that turns into accounts receivable and then we start from all … that lag can be anywhere from 60-120 days, sometimes longer. Never underestimate the problem that will be produced higher sales to the financing needs of your inventory.
Clients usually seek inventory financing because the level of investment you have in the product and receivables drain your cash flow. Because sales volume increases your cash flow decreases based on your overall collection period and of course the inventory changes.
Your sales staff certainly never want to be in a position to notify customers that you don’t have the products they have done very difficult to sell.
Does your company have inventory financing strategies? The majority of companies that we talk to in Canada, of course in small and medium enterprises do not have access to inventory financing they need. Is the True Inventory Financing Company in Canada? We feel that the answer is generally ‘no’, they don’t. But if your company will consider the granting scenario of applicable asset loans is where the inventory of financing companies in Canada.
Under an asset-based loan strategy, your inventory is marginalized for what value, by experts who categorically know what value is. You will improve your ability to finance your product if you have an accounting control system, reporting, and inventory in places that make inventory lenders and asset-based ‘.