Wholesale Factoring For Warehouses
Speed is everything in the wholesale distribution industry. Your vendors and suppliers expect to be paid on time or perhaps even early. However, your customers have several months—anywhere from 30 to 90 days—before they have to pay their invoices.
Slow-paying customers and eager suppliers combine to create a conundrum that ends up straining a wholesale distributor’s cash flow. This lack of working capital causes a number of issues and can negatively impact a variety of essential warehouse expenses—
- Operating expenses
- New equipment rentals and purchases
- Business insurance and licensing fees
- Employee insurance and benefits
- B2B marketing
- Growth and acquisitions
However, there is a wholesale warehouse funding solution that guarantees your warehouse has the cash flow and working capital it needs to not only function but expand operations.
Wholesale factoring is a unique B2B financial service that helps businesses that depend on customer invoices for income. Wholesale factoring helps these wholesale distributors sidestep the thorn in the side that is slow-paying suppliers and vendors.
Ready to learn more about wholesale factoring? Fill out our contact form, and one of our representatives will reach out to answer any of your questions and help you decide if wholesale factoring is right for your warehouse.
Or, if you are ready to start, fill out a credit application here.
What is Wholesale Invoice Factoring For Warehouses?
Wholesale invoice factoring—also known as accounts receivable factoring—is a financial service that helps B2B businesses improve their cash flow and increase their working capital. The factoring company purchases your invoices at a slight discount and sends your funds directly into your business account via ACH transfer.
This discount is known as the factoring fee and is a small percentage of the invoices you choose to factor. The factoring company also holds a small percentage in reserve until your customers pay their invoices. Once they have paid, we send the reserve back to you, minus the factoring fee.
When is Warehouse Factoring B2B the Right Call?
Invoice factoring has many advantages for B2B businesses that rely on customer invoices. Wholesale factoring might be a good option for your distribution company if—
- Your warehouse is running into cash flow issues and is having trouble affording all its operating expenses. A/R factoring puts your money in your business account in a matter of hours, not months.
- Your wholesale business relies heavily on seasonal income, invoice factoring ensures that your business receives capital from invoices as they are created, not as customers decide to pay.
- Your warehouse needs help collecting payments from slow-paying customers. Factoring companies help their clients with collections and customer management.
- Your distribution business needs more cash flow to take on new sectors and meet business growth goals.
- Your company’s cash flow is at risk due to problems with the supply chain.
But how does invoice factoring compare to other financial services and funding methods?
Wholesale Factoring is a Preferred Warehouse Funding Option
Bank loans and SBA loans are other funding methods for B2B businesses. How does invoice factoring compare to these financing methods?
- Invoice factoring is not a loan. Your business doesn’t take on debt when they partner with a factoring company. Additionally, you don’t owe interest on the funds we send you—it’s your capital.
- Wholesale factoring is much faster than other financing methods. Bank loans and SBA loans can take months to be approved. Once a factoring company has you in their system (which takes a matter of days), it only takes hours to process and approve the purchase of your company’s invoices. That means you secure your funds faster.
- Getting approved for factoring services is much easier than getting approved for a bank loan. The approval process not only takes longer for bank loans but requires more extensive vetting and due diligence on the part of the bank.
- Bank loans require collateral, including property, machinery, and other essential business items. With invoice factoring, your invoice is the only collateral if your customers fail to pay.
To learn more about how invoice factoring compares to other financing methods, check out our blog post on financing vs. factoring.
How Can Great Funds Factoring Help Your Wholesale and Distribution Company?
So, what does the receivables factoring process look like for wholesale and distribution companies? Here is a quick explainer of how Great Funds Factoring handles wholesale and distribution factoring and helps secure working capital for B2B businesses.
Our Factoring Process
At Great Funds Factoring, we understand that there are many financial challenges that even the most successful businesses can go through. Good communication is key to developing a strong working relationship with our clients, and will strive to be personally available to answer questions about receivables factoring.
During the discovery process, we aim to understand your business needs better, gain your trust, and determine if open account receivable factoring fits you.
After submitting your credit application, Great Funds Factoring, LLC will review your credit application and other required documents, such as bank statements, master customer lists, and financial statements.
When the due diligence is completed, Great Funds Factoring works on the approval process. Usually, the entire process of both underwriting and approval review takes one to two business days. Once approved, we will send you the proposal and all documents needed to set up your account.
As you send invoices to your customers, we verify them and advance your funds immediately to your account while holding a small amount in reserve until your customer pays their invoice.
Recourse vs. Non-Recourse Factoring
Great Funds Factoring offers recourse factoring, which is different from non-recourse factoring. To learn more about the difference, check out our blog post on recourse factoring vs. non-recourse factoring.
With recourse factoring, our clients are responsible for paying us back if their customers do not pay their invoices. With non-recourse factoring, clients do not have to pay the factor back if their customers do not pay.
Recourse factoring is less expensive than non-recourse factoring because companies that offer non-recourse factoring take on a larger amount of risk. Because of this increased risk, they charge more for their factoring services, and their approval process is much more stringent.
By spreading the risk across our partnership, we save our customers time and money.
Is Your Wholesale Business Ready to Partner with Us?
The invoice factoring services Great Funds Factoring offers are perfect for many B2B wholesalers and warehouse distribution centers.
If you want to learn more about our services and how they benefit businesses in the wholesale and distribution industry, fill out our contact form, and an invoice factoring representative will contact you.
Or, if you are ready for wholesale and distribution factoring services, begin your credit application here.
Let us help move your business forward
Great Funds Factoring LLC
Contact Great Funds Factoring and Get Paid Fast
Great Funds Factoring helps your business unlock its capital fast, efficiently, and securely. You can’t afford to be a second behind in the tech industry. Great Funds Factoring helps get your business ahead.
Call Great Funds Factoring at 910-My-Money, (910-696-6639) or use our online contact portal.
If you are ready to get started, fill out our online credit application and unlock the power of your customers’ unpaid invoices today.