The Impact of Inventory on Business Financing

From large manufacturers to import/export companies to niche online stores – inventory plays a vital role. Without inventory, businesses cannot fill customer orders. However, without revenue from sales, businesses cannot purchase more inventory or the raw materials to produce inventory to sell to customers. While many product-based businesses turn to loans to bolster their inventory stock and production capabilities, there is a better solution that doesn’t involve taking on debt.

Loans Restrict Potential

Seeking out loans to increase inventory or purchase raw materials has a number of drawbacks. First, loans place debt on the books. The debt incurred from loans means more revenue is going towards paying off the balance, which ultimately reduces the profit margin on sold items while simultaneously increasing the cost to purchase or produce inventory. Many manufacturers and retailers end up having to sell a lot just to break even and overcome the financial restrictions of loans plus regular overhead expenses. There has to be a better way to get a source of working capital without placing such a strain on cash flow and internal finances.

Leveraging Inventory for Capital

Manufacturers and retailers alike can use their existing inventory, as well as other assets to create a revolving line of credit. Inventory has value, as does equipment, property, receivables, and more. This value is used to structure a line of credit which can be used for anything your business needs, including purchasing materials for production or to stock up on inventory to fill customer orders. The revolving line of credit is accessed as needed, and paying the balanced owed replenishes the amount of financing available. Additionally, as inventory grows and the business expands, the amount available on the line of credit will also increase. Best of all, an asset based line of credit does not place any debt on the books and allows businesses to preserve and even improve their credit ratings.

CNH Finance specializes in asset based solutions for businesses of all sizes. We uncover the hidden value of your assets to provide renewable, debt-free, working capital to promote growth and long-term success. Contact CNH Finance today and find out how your business can get a line of credit without having to jump through hoops.


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