Factoring for the Wholesale and Distribution Industry

As a wholesale distributor, your job is to move a product from manufacturer to market.
It’s the typical middle man role in the business-to-business realm; a position that can experience uneven cash flow month to month due to accounts receivable being tied up. You may not get paid until the product is sold to a consumer. You may have to do the unthinkable and turn down business because you’re waiting to get paid.

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Here’s an example of how one distributor used invoice factoring to shore up their cash flow, grow their business, and take on their biggest order yet.

Peekaboo Prizes is a wholesaler of specialty gifts and souvenirs. Business was good for the first four years with monthly sales growing to the $80K range, and then suddenly things got a whole lot better. A major amusement park chain approached Peekaboo with a contract to stock all of their gift shops. Even though Peekaboo didn’t have the capital to fund an additional $95K in monthly orders, they needed this opportunity to grow the business to the next level.

Peekaboo Prizes was able to come up with about $25k in cash, but it wasn’t enough to order the products from their manufacturer, who didn’t offer payment terms. A colleague suggested factoring their accounts receivable as a way to acquire the capital needed to fulfill the big order.
With nearly $90K in unpaid accounts receivable, Peekaboo was able to factor enough invoices to receive a $72k cash advance from a factoring company and take on the account. The new contract increased their annual profits by 50% and helped build the infrastructure to handle large scale orders from other big clients.

For more information on how Universal Funding can improve your cash flow and ensure the growth of your business call us at 1-800-405-6035.

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