Purchasing Supplies and Materials for Large and Unexpected Orders
Sales and customer orders are wonderful, but every once in a while an order comes through that requires supplies or raw materials that you simply do not have on hand. A loan would take too long to process, and passing on the opportunity for a sale will only put money in a competitor’s pocket. So how do you fill the order without sacrificing day-to-day operations?
Maintaining a Source of Capital
For most businesses, capital is always in motion. Revenue from sales goes back into maintaining operations and filling new orders, while the other portion remains tied up in unpaid invoices. A large or unexpected order can throw this rhythm off balance, causing a conundrum. If capital is diverted to a large order, then regular operations suffer. A business needs a source of capital that can be drawn upon as needed, without placing a strain on cash flow or debt on the books.
Leveraging Assets for Capital
Loans take to long to process and place debt on the books. Cash advances are too cost prohibitive. The best strategy is to get a renewable source of working capital in place before an unexpected order comes through. Anticipation can mean the difference between scrambling to fill an order and handling it like a pro. To get things prepared, business owners use asset based financing. Asset based financing provides a revolving line of credit structured around the value of receivables, inventory, equipment, and other items. The line of credit can be accessed for any purpose, and the amount of financing is renewed as the balance is repaid. This gives businesses a reliable source of capital so they can handle large or unexpected orders without having to take out loans or use other cost-prohibitive financing methods.
Beyond Selling Products
Asset based financing is also used by the healthcare industry. Practices of all sizes use asset based financing to ensure there is capital on hand for medical supplies. Much like the business scenarios mentioned above, medical practices need capital for supplies to handle a large influx of patients. Since no one can really predict when people are coming into an emergency room, having a source of working capital to purchase medical supplies is essential for continued success.
Cnh Finance provides asset based solutions so businesses and medical practices have the capital on-hand to purchase the supplies they need. Contact our offices today to learn more.