Distribution companies typically coordinate the movement of goods from suppliers to customers, requiring investment in warehousing, transportation, and inventory management, often while extending payment terms to business customers. These combined pressures can create ongoing working-capital needs.
Growth in distribution often involves adding warehouse capacity, upgrading logistics equipment, or taking on new supplier or customer relationships, each of which may call for a different type of financing depending on the scale and timing of the investment.
Common cash-flow challenges
Extended customer payment terms, seasonal demand shifts, and the cost of maintaining inventory and logistics infrastructure are common challenges for distribution companies.
Typical operating expenses
- Inventory and warehousing costs
- Transportation and logistics
- Warehouse staff and equipment
- Technology for inventory and order management
- Insurance and facility costs
Growth and equipment needs
Expanding warehouse capacity or investing in material handling equipment such as forklifts and conveyor systems are common growth investments.
Receivables and cash-flow timing
Because distributors often bill customers on extended terms, financing tied to outstanding receivables may help support consistent cash flow.
Financing options that may fit
- Invoice factoring for outstanding customer invoices
- Equipment financing for warehouse and logistics equipment
- Business lines of credit for inventory and operating needs
- SBA financing for facility or business expansion