Distributors are currently feeling pressure as the demand for capacity loads is high, but transportation availability is experiencing a strain. The result is large orders from customers, but dwindling capital for distributors to meet the rising demand.
Strengthening Links in the Supply Chain
Distributors need access to reliable transportation. Currently, the transportation industry has a lack of available drivers. In order to secure contracts with dedicated trucking companies or to build in-house fleets, distributors need access to working capital. Unfortunately, a good portion of the capital necessary to strengthen links in the supply chain is tied up in unpaid receivables. Analysts are warning against loans in the current market because the accompanying debt will place an even greater strain on distributors.
Distributors are Experiencing Growing Pains
From raw materials to automotive parts to medical supplies and everything in between, distributors are experiencing larger orders and new clients. To fill those orders, distributors need to purchase items from manufacturers, some of which are overseas. If capital is tied up in receivables which haven’t been paid, filling those orders can place a major strain on finances. Taking out short-term loans for capital to fill customer orders only increases the strain. The loan payments eat into revenue and can ensure similar cash flow issues crop up in the near future.
One Solution for Multiple Issues
Distributors need a solution which provides capital to fill large orders and strengthen their supply chains. Accounts receivable financing offers such a solution. Instead of burdening distribution companies with debt through loans, accounts receivable financing simply converts unpaid receivables to cash. This gives distributors fast access to the capital they need to not only provide for their existing customers but also expand into new territories and court larger client accounts. The fast turnaround on invoices means distribution companies can greatly improve their cash flow and gain an even greater advantage in the marketplace, instead of trying to juggle logistics at every stage of the supply chain.
FSW Funding provides the most comprehensive accounts receivable financing services for distribution companies. Whether you are trying to grow your business, build your own fleet to meet increased demands, or if you just want to improve cash flow and build up reserves, FSW Funding will provide solutions for your needs. Contact our offices today to learn more.