Reduce Warehouse Costs With Accounts Receivable Financing
As businesses grow, so do their facilities. And as your building footprint increases, so does the overall cost. High overhead has taken companies down, as profits immediately end up going to pay bills.
When considering how to keep your warehousing costs as low as possible, it’s good to weigh all of your options. If you’re renting space and you have a good reputation with your landlord, he or she may give you a deal to add additional area. But that isn’t always the case, as it’s in the owner’s best interests to offer it to another tenant who’s willing to pay full price for the much needed space. Another option some entrepreneurs look at is moving operations to another neighborhood where property values are lower. But if the location is out-of-the-way, it can add time to your commute and make deliveries more complicated. And if the building isn’t well-maintained, it may come with a lower price, but you’ll risk damaging inventory and equipment. A last option is buying your own space, but in that case you’ll end up having to shift your business’ focus from its current specialty to that of property management.
Accounts receivable financing solves all of the above challenges by giving you the capital to make a purchase once your transaction is in the pipeline. Rather than purchasing inventory ahead of time and letting it sit for an unknown period of time, you can buy it as you need it. This allows you to take advantage of market prices as well, which in many industries means you can take advantage of special promotions. When your business gets in the swing of operating this way, you minimize risks and only focus on profitable opportunities.
To truly understand the difference between warehousing and accounts receivable financing, you’ll need to consider the costs of shelving goods besides that of the space itself. If you purchase a product at a good price that later becomes obsolete, you’ve lost out completely. Theft is also a common problem in warehousing, even from employees who were once a trusted part of your business’ operations.
You can factor orders even without an A+ credit rating. It also gives you the opportunity to use cash for other bills. It can be used to cover operational costs such as shipping and even payroll.
Accounts receivable financing is a great way to leverage business flexibility while keeping a small inventory. Because of its many advantages, more businesses are opting in.