Live Chat
Supply Chain Financing for DistributorsFreeing up working capital by factoring invoices with DB Squared can position a distribution business to grow more quickly.

Supply Chain Finance

Distributor Financing through Invoice Factoring – Rates as Low as 1%

The same challenges that affect other B2B organizations also drive the need for supply chain finance. Having the ability to take on new business, take advantage of manufacturer discounts for large purchases or purchase inventory needed to satisfy larger clients are just a few of the times when a distribution company might be looking for a supply chain finance tool.
supply chain financing for distributors

Supply Chain Finance Solutions that Improve Cash Flow

Cash flow is critical to every type of business, including U.S. distributors who make it possible for all kinds of manufacturers’ goods to get to retail stores, e-commerce retailers and other points of sale.

Similar to other businesses that wait for their customers to pay via accounts receivable invoices, distributors can also experience cash flow challenges that have the ability to derail their growth.

How to Employ Invoice Factoring as a Distributor Financing Tool

Distributors often extend payment terms to their own customers of 30, 60, 90 days (or even longer). However, these same distributors may be required to pay manufacturers up front for the products they purchase from their suppliers. In some cases, distributors may even be required to pay suppliers right away, rather than on terms.

This is the type of supply chain finance scenario that makes invoice factoring a viable distributor financing option!

The Invoice Factoring Process

Opportunity Cost Calculator

Factoring for Manufacturers
 
 
supply chain finance distributors

Receivables Financing as a Supply Chain Finance Tool

When invoice factoring companies factor (or purchase) invoices, they buy invoices at a discount. This puts working capital into the hands of the organization that factors (or sells) their invoices to DB Squared right away, instead of waiting for their customers to pay.

Distributors that factor invoices with DB Squared eliminate the weeks – or months – spent waiting for their customers to pay.

This type of distributor financing frees up the working capital that would otherwise be tied up as money represented by their accounts receivables invoices.

Distributors that factor invoices can reinvest more quickly in the inventory needed to attract more customers, in additional new product lines needed to expand their customer base or in large inventory purchases needed to satisfy orders of larger clients or receiving a bulk purchase discount.

Working capital freed up by invoice factoring can also be used to improve cash flow needed for operational expenses, equipment purchases and repairs, expansion and other capital expenditures.

In the following supply chain finance scenario, we demonstrate how invoice factoring can improve distributor cash flow using the fictitious organization, the Dynamic Distribution Company, as an example.

distributor financing alternatives

Supply Chain Finance Scenario: Distributor Financing through Invoice Factoring

The Dynamic Distribution Company decides to grow their customer base by adding product lines from a manufacturer that has strong consumer demand. The manufacturer requires all new distributors to carry their whole line of products and to commit to selling through a set number of introductory retail starter kits within 90 days of launch.

The Dynamic Distribution Company wants to take advantage of the manufacturer’s 8% discount on accounts paid upon receipt of delivery rather than 90 day terms.

Not wanting to interrupt their normal cash flow needed to meet operational expenses, they explore supply chain finance options and decide to take advantage of our distributor financing tool by factoring invoices with DB Squared in order to free up working capital needed to take advantage of the manufacturer’s discount.

So they factor (or sell) their accounts receivable invoices to DB Squared at a discount. Within 1 business day, for each invoice factored, DB Squared forwards up to 98% of the face value amount, retaining the remaining 2% (less factoring fee, which is usually from 1-6%) as a “reserve.”

As each of the purchased invoices are paid in full, DB Squared also releases the reserve amounts back to the distributor.

Contact us to request more information about distributor financing options.

distributor financing alternatives

what is invoice factoring

Find out more about how factoring can help as a supply chain finance tool.

Find out more about Invoice Factoring by using our opportunity cost calculator to estimate whether invoice factoring could give you access to working capital needed to grow your distributorship - or click below to request more information about distributor or supply chain financing options from DB Squared.
Complete Our No Cost, No Obligation Application
apply for distributor financing


Financing for Distributors

Invoice factoring gives you access to up to 98% of a customer invoice immediately – without waiting for them to pay – so you can reinvest and grow your distribution business more quickly. 

Factoring Quick Quote

Request a free, no obligation quote or get more information about receivables financing:
 











Subscribe to updates?:


 Security code



DB Squared Inc.

Recent Updates

 

Follow Us

 
 
Subscribe

* Email
* First Name
* = Required Field