Wholesale & Distribution Factoring
Buy inventory ahead of demand without waiting on your own customers to pay down last month’s invoices.
Let's fund your wholesale & distribution business.
Two questions to start. No obligation, no credit pull.
What is wholesale and distribution factoring?
Wholesale and distribution factoring gives distributors cash against invoices they have already sent, so they can reorder inventory before customers pay. An A/R line of credit does the same job on a revolving basis, with availability that follows your receivables as sales rise and fall through the year.
The cash flow challenge for wholesalers and distributors.
Distributors carry the classic cash conversion problem: buy inventory, sell it on terms, wait to get paid, then buy more inventory. Financing shortens that cycle so growth doesn’t starve you of cash.
The cash conversion cycle in distribution is unforgiving: capital goes out to buy inventory, more capital goes out to carry it on a shelf, and only after a sale closes and the customer pays does any of it come back. A distributor that moves fast on reorders to catch a seasonal spike can be cash-poor at exactly the moment the opportunity is biggest, even while the underlying business is healthy and growing.
Financing shortens that cycle by advancing against receivables as soon as an invoice goes out, rather than waiting for the full 30 to 60 day term to run. For a distributor carrying a book of recurring retail or wholesale accounts, that can mean the difference between buying ahead of a known seasonal order and scrambling to fund it after the order has already been placed.
How receivables financing works for wholesalers and distributors.
- You buy inventory from suppliers, often on shorter terms than the terms you extend to your own customers.
- You sell and deliver to retailers, contractors, or other businesses, then invoice on net terms.
- You submit the invoice and receive an advance on most of its value, so cash is available to reorder before the customer pays.
- Once the customer pays, we send you whatever was not advanced, less our fee.
Who pays you, and when.
Distributors sell to many customers of very different quality, from national chains to small independent shops. That spread is why customer-level review matters here: a handful of strong accounts can support financing even when the rest of the book is mixed. It also means concentration is worth watching, since one dominant customer can tie your cash flow to a single payment date.
Terms commonly run net 30 or net 45, and larger accounts often stretch them. Meanwhile suppliers expect to be paid on schedule, sometimes in advance, and may offer early payment discounts that only help if cash is on hand when the invoice arrives.
Common pressure points.
Inventory has to be bought before it can be sold, and sold before it’s paid for.
Seasonal demand spikes require inventory buildup well ahead of the cash that spike will eventually bring in.
Thin margins on volume mean one slow-paying customer can consume a month of your cash cushion.
What the funding pays for.
- Restocking ahead of a seasonal peak
- Taking early payment discounts from suppliers
- Warehouse labor, fuel, and delivery costs
- Inventory for a large new account that needs product on the shelf before it pays
- Absorbing a supplier price increase before it can be passed through to customers
Choosing between factoring, a line of credit, and payroll funding.
For distributors, an A/R line of credit is often the best structural fit. Inventory purchases arrive in unpredictable amounts, and a line you can draw on as needed, tied to your receivables, tracks that better than advances on individual invoices. If you already have a bank line, our guide on A/R financing vs. a bank line of credit explains how the two fit together.
Invoice factoring is useful for specific large accounts or seasonal peaks, since you can choose which invoices to submit. Many distributors use it selectively rather than for the whole book.
Payroll funding is seldom relevant for a business that invoices when goods ship, but it can apply to value-added service work you perform before you are able to bill.
What to have ready.
- A current accounts receivable aging report
- A customer list with payment terms and typical order size
- Invoices and proof of delivery for what you want financed
- A summary of your supplier terms and upcoming inventory commitments
- Details of any existing bank or lender facilities
Wholesale and distribution factoring questions, answered.
Can this fund inventory purchases directly, not just receivables?
The line is based on your receivables, but the cash you draw is yours to use, including for inventory, so you can buy ahead of a known order or season.
What if I sell to a mix of large and small retailers?
That’s common and workable. Larger, more established accounts typically support a bigger advance rate than smaller or newer ones.
How does seasonality affect the facility?
Availability follows the eligible receivables you carry, so it rises as seasonal sales are invoiced and eases afterward. Cash you need before those invoices exist has to come from receivables you already hold.
Can I use financing to fund inventory purchases?
Financing is based on your receivables, but the cash you draw or are advanced is yours to use, including for inventory. Many distributors use it to reorder before their customers have paid.
How do a few large accounts affect approval?
A few strong, creditworthy accounts can support financing well. Heavy reliance on a single customer is something we look at, because your cash flow then depends on one payer, and it can affect how a facility is structured.
Can financing handle seasonal inventory buildups?
Yes. As seasonal sales are invoiced, availability on an A/R line of credit rises with them, which lines up with when you need to buy inventory ahead of the next peak.
Is this useful if I already have a bank line of credit?
It can be, where your existing lender permits it. A bank line is typically set by your historical financials and reviewed on the bank's own credit cycle, so it may not keep up with fast growth. A lender with a lien on your receivables will need to be part of the conversation, and its consent may be required, so tell us about any existing facilities up front.
How quickly can wholesalers and distributors get funded?
A facility can often be in place in days. After that, new invoices can be funded as fast as the same day, which is quick enough to reorder before the next shipment arrives.
Businesses with similar cash flow patterns.
Other industries we finance.
- Transportation & Trucking
- Manufacturing
- Staffing & Recruiting
- Printing & Packaging
- Business & Professional Services
- Technology & IT Services
- Security Services
- Janitorial & Facility Services
- Oilfield & Energy Services
- Healthcare & Medical Staffing
- Food & Beverage
- Import & Export
- Telecommunications
- Logistics & Freight Brokerage
- Warehousing & Fulfillment
- Marketing & Advertising
- Government Contractors
Ready to fund your business?
Tell us about your company and we'll get in contact with you to discuss next steps. There is no cost or obligation to get started.