Universal Funding urges Costco suppliers and other large retailers to secure financing to bridge the payment gap that puts a serious strain on their cash flow during the 4th quarter. The last quarter of the year is when Costco, Target, Walmart, Home Depot, Best Buy and other large retailers are bulking up with holiday inventory. While they grow their inventory to meet holiday demand, the cash flow burden is often shifted to their suppliers.
Often, the only way to be a supplier to large retail buyers like Costco is to make sure you can get through a quarter waiting for payment. Costco has a preferred partner they recommend their vendors use for financing. However, based on their terms, you still may wait 2-5 days depending on the day of the week you submit your invoices for factoring. For some companies waiting more than 24 hours on a large order can be detrimental to the cash flow, operations, and business credit.
Here’s what Justin Murfin of the Yale School of Management has to say on the matter:
“When a firm like Walmart, Target, or Costco pays more slowly, their small suppliers can’t just borrow more money, so they cut back on spending,” says study co-author Justin Murfin, assistant professor of finance at the Yale School of Management. “They invest less, they cut overhead, they do whatever they can to support their much bigger buyers. That causes a big distortion in the economy because firms that potentially have good projects to invest in can’t invest in them because they’re allocating their scarce capital to support these big buyers who don’t face any financing constraints.”
Don’t wait until after the holidays to get paid. Keep your cash flow high during the holiday season–or all year long for that matter. Our invoice factoring financing puts money back into your business so that you don’t have to cut back on spending and growing.
Give us a call today at 1-855-782-1493 or complete a rate form and a Business Development Specialist will get in touch with you right away.