How Do You Fund Your Inventory Purchases?

Paying with cash is the most straightforward, low-risk way to purchase inventory, especially if you have the benefit of an appropriate business management solution like Sage 100 to help you track invoices and payments. If cash flow is an issue for your business, however, it’s worth noting that alternative ways to fund inventory purchases exist.

Here are a few examples of ways you could fund your inventory purchases without using cash.

Buying on Suppliers’ Terms

Some suppliers will offer you payment terms, allowing up to 30, 60, or 90 days to pay. While this payment method can enable you to sell your products before you technically pay for them, it can also cause problems if you hit an unexpected slow period and get less revenue than you forecasted.

Sell Before You Buy

Another way to finance your inventory purchases is by preselling. Preselling involves having customers buy and pay for products before you manufacture them. In this scenario, you can use the revenue from sales to buy inventory, after which you can manufacture and ship your products to customers. If you choose this route, you’ll need to be extra organized so your customers receive their purchases in the promised time frame.

Purchase Order Financing

Another possibility for financing your inventory is through purchase order loans. Specialist lenders, providing you can satisfy their lending criteria, will pay your suppliers directly and then deduct the repayment, plus lending fees, from your customers’ paid invoices. They'll then forward the invoices and remaining revenue to you.

Keep on Top of Invoices and Payments

If paying with cash is just not practical for you, you may find that one of the options described here is a better way to fund your inventory purchases. However you choose to pay, though, a business management suite like Sage 100 is necessary for organizing your accounts payable and receivable.

Southeast Computer Solutions specializes in Sage business applications and can implement Sage 100 to help you manage sales and orders, monitor invoices, receive payment alerts, and have excellent inventory control. Contact us for more information.

About Southeast Computer Solutions

Southeast Computer Solutions is based in Miami, Florida, and has additional operations in Mexico. For over 30 years, we have positively impacted the success of small and mid-sized businesses with effective business management implementations that improve our clients’ operations. We listen, we are accessible, and we care. Learn more by visiting our website or calling 305-556-4697.

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