Taking money One common mistake many business owners make when they first set foot on the road to entrepreneurship is not being able to compartmentalize. One thing is your business and another one is your personal life.
The same goes for your finances. to support your business is a dangerous and often bad decision. If your business fails, you end up losing both your source of income and the money that was meant to help you live your retirement dream or keep your kids in college. Similarly, using your company’s money for your personal nes is risky and can even lead to criminal charges.
For these reasons, there are personal loans and business loans and each one should be taken separately depending on the circumstances. Inventory financing is a type of business loan. As its name suggests, this financing aims to help businesses cover their inventory nes. Inventory financing is available through different loan types and each loan’s requirements and terms depend on the lender. In some cases, lenders ask for collateral for the loan and the inventory itself can be us for this purpose.
2. Traditional Types of Inventory Financing
There are two main types of inventory financing that are usually offer by banks, namely WIP financing and PO financing. Work-in-process (WIP) financing refers to funding you get for the manufacturing process. This usually involves paying sub-suppliers for the components they provide. This type of financing is suitable for companies that sell complex products whose manufacturing requires multiple supplies and takes a long time. A potential problem with WIP financing is that depending on the length of the manufacturing process, you sao tome and principe email list 150000 contact leads risk not being able to start selling your products before you have to start repaying the financing.
PO financing refers to purchase
To get this type of financing, you first ne to receive a purchase order. Bas on this order proof, the lender will provide you with the necessary funds to fulfill the zoho writer order. This is a good solution for sellers who have large purchase orders and partner with big retailers. An advantage of PO financing is that you are typically only requir to pay it back after the company that issu be numbers the purchase order pays the invoice. However, since this type of financing requires a PO, it’s unlikely to be able to get one as a direct-to-consumer e-commerce company.
