Inventory Finance

Don't let limited cash flow hold your business back! Inventory finance offers a smarter way to access capital.

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Inventory Finance: What You Need to Know

Key takeaways:

  • Inventory finance helps businesses bridge the gap between purchasing inventory and selling it to customers. This ensures they have enough stock to meet customer demand and avoid stockouts.
  • Businesses can use inventory finance to purchase additional inventory to support sales growth or take advantage of bulk discounts from suppliers.
  • By freeing up cash tied up in inventory, businesses can improve their overall liquidity and invest in other areas of their operations, such as marketing or product development.

What is an Inventory Finance?

Inventory finance isn’t your standard loan. It’s a game-changer for businesses wrestling with cash flow and growth limitations. Here’s how it works: Imagine your shelves brimming with potential – raw materials waiting to be transformed, finished goods ready to fly off the shelves, or even partially completed projects with the promise of future sales. Inventory finance allows you to unlock the hidden value within these assets.

Unlike traditional loans that demand real estate or equipment as collateral, potentially hindering your operations, inventory finance sees the potential in your stock. By leveraging your existing inventory as security, you gain access to a valuable credit line. This injects much-needed capital into your business, empowering you to:

  • Bridge the cash flow gap: Inventory purchases can deplete your cash reserves before you see returns from sales. Inventory finance acts as a bridge, ensuring you have enough stock to meet customer demand and avoid stockouts.
  • Fuel growth opportunities: A sudden surge in sales or a chance to capitalize on bulk discounts from suppliers shouldn’t be hindered by cash flow limitations. Inventory finance allows you to seize these opportunities by providing the capital needed to purchase additional stock and maximize your profit potential.
  • Maintain crucial liquidity: By freeing up cash tied up in inventory, your business breathes easier. This improved liquidity empowers you to invest in other areas crucial for growth, like marketing initiatives or product development.

Think of inventory finance as a strategic tool that allows you to leverage your existing assets to unlock new possibilities for your business. It’s a financial solution designed to fuel your growth, not restrict it by demanding valuable collateral.

Benefits of Inventory Financ

Bridge the Cash Flow Gap

Inventory finance acts as a safety net, catching you before the fall. By providing a credit line secured by your existing inventory, it injects much-needed capital.

This allows you to replenish stock without depleting cash reserves, ensuring you can:

  • Respond quickly to customer demand: Never miss a sale because you’re out of stock! Inventory finance empowers you to maintain optimal stock levels, so you’re always prepared to fulfil customer orders and avoid the frustration of stockouts.
  • Maintain positive customer relationships: Imagine a customer eager to buy your product, only to be met with an empty shelf. Inventory finance helps you avoid this scenario, ensuring a smooth buying experience for your customers and fostering long-term loyalty.
  • Reduce the risk of lost sales: Stockouts can have a devastating impact on your bottom line. Inventory finance helps mitigate this risk by allowing you to maintain a safe stock of essential items, preventing lost sales opportunities.

Fuel Growth

Imagine a golden opportunity soaring towards your business – a sudden surge in sales or a chance to secure bulk discounts from suppliers. Without readily available cash, however, you might miss out on these growth opportunities. Inventory finance acts as your launchpad, propelling you towards these possibilities.

By leveraging your existing inventory, you gain access to a credit line that fuels your growth in several ways:

  • Capitalize on sales spikes: Sudden spikes in demand can be overwhelming, but with inventory finance, you’re prepared. You can quickly purchase additional stock to meet the surge, maximizing your profit potential and capitalizing on this golden opportunity.
  • Embrace bulk discounts: Bulk discounts from suppliers can offer significant cost savings. Inventory finance empowers you to take advantage of these discounts by providing the capital needed to purchase larger quantities, ultimately increasing your profit margins.
  • Expand your product range: Ever considered adding new products to your offerings, but were hesitant due to cash flow limitations? Inventory finance allows you to explore these possibilities by providing the resources needed to purchase additional inventory and test the waters of new product lines.

Maintain Liquidity

Imagine your business as a treasure chest overflowing with potential, but a portion of that treasure – cash tied up in inventory – remains locked away. Inventory finance acts as the key, unlocking this hidden value and freeing up vital resources for your business to thrive.

By utilizing inventory as collateral, you gain access to a credit line that injects liquidity into your business, allowing you to:

  • Invest in marketing and sales: A strong marketing strategy is crucial for business growth. Inventory finance frees up cash that can be used to launch effective marketing campaigns, attract new customers, and boost sales.
  • Focus on product development: Innovation is key to staying ahead of the curve. With inventory finance, you can invest in research and development, allowing you to create new products or improve existing ones, ensuring a competitive edge in the market.
  • Enhance operational efficiency: Investing in new equipment or technology can streamline your operations, improve productivity, and ultimately lead to cost savings. Inventory finance allows you to explore these possibilities, propelling your business towards greater efficiency.

How to Qualify

While the specific requirements may vary between lenders, here’s a general idea of what you’ll need:

  • Strong Financial Statements: Lenders want to see a healthy financial track record, including past sales figures and projections for future sales.
  • Manageable Inventory Levels: Effective inventory management is key. You’ll need to show the lender you can maintain optimal stock levels without tying up excessive capital.
  • Good Credit History: While not always a deal-breaker, a good credit history can strengthen your application and potentially lead to more favourable loan terms.

Remember Inventory finance isn’t a one-size-fits-all solution. Discuss your specific needs with a lender to determine if it’s the right fit for your business.

Frequently asked questions

Inventory finance is particularly helpful for businesses that manage physical stock, such as wholesalers, distributors, manufacturers, and retailers. However, any business holding inventory as a significant asset can potentially explore this option.

There can be some risks involved with inventory finance. Since the loan is secured by your inventory, failing to manage it effectively or experiencing a decline in sales could lead to difficulty repaying the loan and potentially losing your inventory.

Inventory finance typically involves interest on the borrowed amount, origination fees for setting up the loan, and potential storage fees if the lender requires your inventory to be stored in a specific location.

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