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As an ecommerce seller, you’ve likely heard a thing or two about inventory financing. What’s true and what’s fable? Before you embark on your own financing search, we want to help you get a few things straight so you can make the right decisions for your business and its growth.
With that, here are 5 myths and truths about inventory financing:
Truth: Business financing is completely different than personal debt.
On one hand, business financing is a tool for growth. Business lenders want to see that your business is showing promise before they’ll even approve your application. Moreover, in many cases, they will also want to know what you’ll use their funds for. And because you need business financing for a specific use-case — like buying bulk inventory at a discount to maximize your margins or launching a marketing campaign to boost sales — you can be confident that your investment will pay off.
Meanwhile, personal debt doesn’t take your business into account at all. And, if not used responsibly, could put you into serious financial trouble.
Truth: In actuality, buying inventory is the perfect use-case for financing.
This is especially true when you experience payout delays that limit your ability to turn inventory quickly or consistently.
With financing, you can buy inventory in real-time / as you need it. This means that you never experience a stockout or its money-losing consequences like forfeited sales or account suspension. Not only that, but you can also take advantage of that flash inventory sale your supplier is running (you know, the one that will help you increase your margins and make more money).
At the end of the day, you stand to lose more money if you only buy inventory when you get your marketplace payouts — and in many cases, this ends up being more expensive than the actual cost of financing.
Truth: As long as you use them responsibly, it’s totally fine to take on different forms of debt.
In some cases, debt can actually be beneficial to your business’s growth. Think about it. There are different types of financing options that work well for different financing needs. For example:
Whatever the reason, you’ll want a financing solution that is designed for it, both in terms of amount, payout options, re-payment terms, and the like.
Truth: In addition to interest and fees, there are other financing costs to consider.
Many of these costs don’t have anything to do with money. For example:
At the end of the day, you want to look at your financing investment from all angles to ensure that it’s the right one for your wallet, your sanity and your time.
Truth: There are a variety of lenders that provide financing to small and online businesses.
Many of these lenders don’t even require a credit check. In fact, some are designed specifically for marketplace sellers, like Payability.
Payability offers a variety of cash flow solutions, provides funding in as fast as 24 hours, and makes decisions without ever running your credit. So, whether you are looking for a large lump sum of cash, need daily payments, or want on-the-go access (or a combination of all three), consider Payability. Learn more about these faster-growing sellers and how you can join their ranks at http://go.payability.com/freeeup and get a $200 sign on bonus.
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