Wholesale distributors juggle many competing demands on their resources. Distribution companies need to keep inventory on hand for customers, ensure prompt delivery, and keep up with expenses that need to be paid on time every month, including salaries, storage, utility bills, transportation, and supplies. Whether they sell sporting goods or seafood, liquor or ladies’ apparel, distributors also must allot time to marketing and signing new customers.
The challenge is to juggle these tasks and pay all bills on time, even though customers may not pay for their products 30, 60 or even 90 days. That’s why many wholesale distributors partner with factoring companies. They can receive payment on their goods right away, instead of waiting for their invoices to be paid. In addition, the distributor can save time and energies on the collections part of their job: the factoring company takes care of collecting on those invoices.
With cash in hand, a distributor can take advantage of product volume discounts from suppliers and work with customers with longer payment terms. You will ensure that your staff is always paid on time and you can focus on growing your business.
Factoring Tips for Wholesale Distributors
Look for a company with experience in working with distributors; you want to work with factoring professionals who know both your business model and your challenges. Find someone who will be your partner in maintaining a positive cash flow year-round and help you expand your customer base.