Inventory Financing: Myths and Truths

Inventory financing is a handy tool that you can bless your business with if used strategically. The flexibility and on-call inflow of funds can help you recover the business facing sudden financial crises or any principal expansion policy. But a few myths and truths are revolving around the tool of inventory financing. Not knowing the right information can hinder your decision-making process and here is thus listed the myth-busters to help you know and grow your business more.

Myth- Personal Debt and Inventory Financing are Identical

The truth is that these two aspects are completely separate and different. Inventory financing is a tool predominantly used by business owners to help their businesses grow. The growth curve of the business needs to be provided in the first place for lenders to approve the loan application. The loan is only approved if your inventory buying plans will take off in the future and yield better returns.

Meanwhile, personal debts do not have anything to do with business. If used carelessly, they can land you in serious financial troubles.

Myth- Buying Inventory doesn’t need Financing

In reality, financing can be used perfectly to buy inventory, especially when the business faces pay-out delays. Stocks will not get that frequently out or sales might not get forfeited.

Myth- It is Better to Avoid Multiple Financings

It is always perfect to maintain multiple financings as long as it is getting optimally used. These can be needed when you want to buy inventory at a discount and sell it off at profit. Or you might need it to extend your brand or product line. Sometimes you might also need it to cope up with seasonal demands.

Myth- Interests are the only Costs Associated

The truth is that there are other financial aspects to be considered as well. Many of these costs are not financial. Aspects like stress and time required to find the perfect lender with the best interest rate can also be an intangible cost that is associated with it.

Myth- Having a Big Business Qualifies for Funding

This is a huge misconception that bars businesses to get financially stable. Many lenders provide to small and medium businesses as well, while many do not even have a credit check.

The lenders are designed especially for marketplace sellers, like Accord inventory financing who believe in customization of financial solutions tailored to your needs, just when your inventory calls for it!

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