Wholesale businesses typically buy inventory in large quantities to secure better pricing, requiring significant upfront capital, while also extending net-30 or longer payment terms to the retailers or businesses they supply. This combination can create sustained pressure on working capital.
As order volumes grow or new customer relationships are established, wholesalers may need financing to purchase additional inventory or to bridge the time between fulfilling an order and receiving payment.
Common cash-flow challenges
Bulk inventory purchasing, extended customer payment terms, and seasonal order volume swings are common cash-flow considerations for wholesale distributors.
Typical operating expenses
- Bulk inventory and supplier costs
- Warehousing and storage
- Freight and logistics
- Sales staff and account management
- Technology for order and inventory management
Growth and inventory needs
Securing larger supplier discounts or taking on new retail accounts often requires additional inventory investment ahead of realized sales.
Receivables and cash-flow timing
Because wholesale customers are frequently invoiced on extended terms, some distributors use financing tied to outstanding receivables to help maintain steady cash flow.
Financing options that may fit
- Invoice factoring for outstanding customer invoices
- Business lines of credit for inventory purchasing
- Business financing for general working capital
- SBA financing for larger expansion