How Inventory Financing Can Help with The Holiday Season

You can feel it in the air. The winds of change blew Halloween candy onto store shelves in July. Back-to-school items infiltrated stores before the calendar hit August. Everything is pumpkin-spiced, and just like that, it will be the holiday shopping season.

That special time of the year brings more consumers into the marketing place, more seasonal displays, special sales, increased competition, and some higher expenses for most brands as they prep for the holiday rush. The holiday season is a focal point of the economic calendar, essential for a company’s health and well-being. The National Retail Federation estimates thirty percent of a total year’s sales can come in the holiday season.

Check out these guides:

• Steps To Improve E-commerce Fulfillment For Black Friday & Cyber Monday
• How To Prepare Your Packaging For Black Friday And Cyber Monday

Whether you’re in your first or tenth year, you know a strong, profitable fourth quarter is vital. You want to continue the sales momentum, but trying to satisfy all holiday inventory demands can leave some companies scrambling for cash to make sure there is stock ready for increased sales volume from holiday customers. 

Some determinations need to be made:

How much product do you need to have on hand? How fast can it be produced and shipped? Are your suppliers ready to handle the orders? How much money do I need to make all this happen?

Once those questions are answered, you could pursue business loans.

While each business is unique, so are the financing options. There are a number of possibilities from straightforward loans, lines of credit, business credit cards, or inventory financing. While they all have their merits, inventory financing can be a lower-cost, lower-risk financing option to secure appropriate inventory for a smashing fourth quarter.

With inventory financing, you receive funding to produce needed inventory and then pay back as it sells, which stocks your shelves without pinching your pocketbook before holiday revenue comes in.

3 Ways Inventory financing Can Help with The Holiday Season

Keeping Sufficient Inventory

If you have a product taking off, but payments haven’t started coming in, use inventory financing to grab another product run. At the same time, sales momentum is high or in preparation for a busy sales season. You get the ability to reorder your top-selling items and make those purchases in bulk. You can use inventory financing toward expanding product lines, which can broaden sales channels. New products can be added without draining existing cash on hand.

No Cost-Cutting

Your company doesn’t have to pare back while waiting for profits to start coming in. There’s a gap between when you pay manufacturers for your next inventory order and when those goods sell and revenue arrives, which pinches the checkbook, especially if you’re placing a larger order to prepare for something like a holiday sales rush. With inventory financing, you don’t need to cut costs across other operational areas to place your order. An inventory financing platform loan will provide you with the up-front financing needed to purchase products while operating your business as usual. 

Seasonality

There are ebbs and flows to the sales calendar. Your cash flows might slow down with a product line that might not sell during the summer months, but the holiday shopping seasons can be huge for your bottom line. Inventory financing can be the best way to secure enough operating capital to ensure you have sufficient inventory on hand to meet the demand of holiday shoppers. You can repay the financing in a short turnaround time, but most importantly, have the cash available to make the needed purchases when the time is right.

Conclusion

Inventory financing is especially helpful when your brand must pay your suppliers in a shorter period than it takes to sell inventory to customers. It also provides a solution to seasonal fluctuations in business to acquire extra inventory to sell during the holiday season. 

Many traditional lenders view inventory financing as an unsecured business loan, as there is a chance that the inventory might not sell. Nontraditional financial firms like Kickfurther or Indiegogo use crowdfunding as a source of funds for a brand. Brand supporters get behind your brand by financing an inventory purchase. As the inventory sells, you pay back the funds, ideal for the needed short duration of most selling seasons, but it also cultivates more supporters and enthusiasm for your product line.

In short, inventory financing or even financing an individual purchase order for additional inventory can set you up for success in the tumult of the holiday shopping season. You will have the funds to maintain inventory, purchase products in bulk, meet seasonal demand, and even expand product lines. With proper planning, inventory financing can be a regular part of your operations all year long.

You can also check Arka, which offers custom packaging solutions for brands. Check out the premium custom mailer boxes or custom folding cartons they offer, and create a memorable unboxing experience for your customers.