No Sales Minimum
No Sales Minimum
When you have opened up your supply business, you will want to know where and how to get your inventory. However, you also have to bear in mind that as a start-up, you will be looking to start with a small inventory, as you will most likely be meeting smaller orders. Thus, you will be looking for manufacturers and wholesalers who allow you to buy at no minimum orders. There are many ways to pay for inventory, but it is important that you keep it at a minimum and only buy more when you are about to exhaust what you have in your stores.
However, with time, you could get more orders than you are able to handle. As a startup, you may not have the money to get all the required inventory at that time. You have to get inventory from somewhere, or an inventory loan from a lender so that you can stock up. Inventory loans come in various forms, but the most notable thing about them is that they are designed for inventory alone. However, you can also be allowed to use the loan in any way you want.
Inventory financing programs
By using an inventory-financing program, you can get inventory at no cost at all. Also, there will be no attached prerequisites like having to sell a certain minimum for you to qualify for the loan. Some lenders want to see proof that you indeed make sales every day before they can advance you this loan.
It is not a bad thing in itself because the lender wants to be sure that there will be enough sales being closed to be paid. However, being a small business just coming up, you may find it hard to record consistent minimum sales every day of the month.
Finding a financing program for inventory allows you to concentrate on other aspects of the business like customer service and chasing sales. After all, you are now not worried about the stock.
Usually, the lender of this loan will act as your liaison between the supplier and you such that they buy on your behalf. They will then put you on a payment schedule that you can meet comfortably, perhaps a daily, weekly or even a monthly payment schedule.
Why is an inventory financing program good?
Buy Larger quantities
You do not have to use the business money to pay for inventor upfront, which can be expensive. You get to use that money for other business needs. You will be able to buy in large quantities so that you can enjoy discounts. This is something that you cannot enjoy when you do not have enough money to buy inventory and can only do small quantities.
You do not waste time looking for wholesalers who can meet your minimum orders
You do not have to worry about minimum deliveries. You will never miss to make a sale because you will always have the inventory. However, make sure you pay on time to keep a good record with the lender who facilitated the inventory financing. That way, even as your business grows in future, you can still be assured of getting more inventories without money.
Save Money
Getting your inventory in bulk may also help you save money in future because the manufacturers may increase prices. If you had bought inventory in advance, you will also save a good amount of money.
Characteristics of No Sales Minimum
Must move the inventory in a given amount of time
You must move the inventory in a given amount of time. Most lenders want you to move the inventory in 90 days with a profit margin of at least 25%. All of these things are very important for you when you want inventory, but you do not have the money to pay for it.
Some lenders have different regulations
Before you can get inventory financing, you may find that some lenders have different regulations. For example, some of them require you to show that you can make gross sales of $10000 a month. However, no sales minimum would be much better for a business that is at the start-up stage.
Know the interest rate
Before you can take any inventory financing program, find out whether it is a no sales minimum one and know the interest rate too. Usually, the interest rate from banks for inventory financing are 4 to 6%, 10 to 18% where there are assets to be pledged as collateral or 18 to 33% for online inventory financing.