Do wholesalers and distributors get the right funds at the right time?
For wholesalers and distributors managing finances is very much different from that of the other businesses. They ought to be ready for large orders and should also be able to handle large payments and transactions.
The difficulties faced by wholesalers and distributors:
Wholesale and distribution industry is a crucial part of the manufacturing sector. This keeps all the big industries running. Any business that runs out of its inventory stock would rely on wholesalers and distributors. But what it their inventory gets exhausted? The associated businesses get affected too. But restocking the inventory for distributors would be heavier and costlier than with restocking in a smaller factory. The business-to-business transactions that occur with wholesalers are very common.
Types of wholesalers who would benefit from merchant cash advance:
Any type of wholesale or distribution business would be able to reap the benefits of applying for merchant cash advance. Here are the main types of businesses that benefit the most from MCAs:
Distributors for industries
Export and import businesses
Assembly related businesses
Cash and carry wholesale businesses
The above-mentioned businesses, as well as distributors and wholesalers of all kinds, might find MCA useful at one point or the other because:
The wholesalers would sometimes need funds on a very short notice
Sometimes the credit history of the wholesalers might not look good on the papers
The cashflow cycle in general for many wholesalers might be pretty long
This is because their suppliers might sometimes have longer payment cycles. This would denote a period of High NSF (Not Sufficient Funds) for some small distributors. During this time, to meet their cash flow, they might not be able to easily apply any bank loan nor would there be many options of NSF unsecured business loans.
Can you go for PO financing?
Distributors and wholesalers, when they get a large order, no matter how much funds are currently available, should be able to take up the order. Larger orders fetch better values and would increase their reputation in the long run. So wholesalers would never risk losing a large order. But what if the funds to meet the purchase needs of the order are not available? PO financing options to fulfill the purchase order finance requirements are often suggested. If your business has a decent track record of order fulfillment and if the order in the picture is also a credit worthy, then you would be able to get a PO fund.This would help tackle the cash flow limitations. But this cannot be the solution in all the cases.
Some orders and some businesses would not qualify for PO funds. PO funds require good track records. So startups or small businesses that have not taken up many large orders in the past might find it difficult to obtain these funds. Also, for those orders that come with refund guarantee, the customers, once the order is fulfilled can request for a return of the goods and the refund of the paid amount. This refund would also cost overheads spent on the transaction. But in most cases, the whole amount would have to be refunded. These are the type of orders that do not qualify for PO funds. You would be left in the same loop again and you would not be able to go to banks or any other conventional business loan lenders. This is when a merchant cash advance can help.
What all should you do to qualify for a merchant cash advance?
Nothing- simply apply for an MCA from a merchant solutions provider and relax while the team processes your application. There are several merchant solution providers. Look for those that serve high risk businesses. These come with more flexible policies and easier application processes. The process takes hardly few days and the advance based on the amount you had requested would be granted to you. You would then have to repay in parts, from the credit card transactions that occur in your business, the borrowed money.
This would be a quicker and more convenient process than a business loan. This would also ensure that you meet the large order in time. With the correct funds, you would be able to source the required order from the suppliers and would be able to meet the order requirements without a delay.
Benefits of merchant cash advance for wholesalers and distributors:
If you are a wholesaler or distributor, chances are that you are applying for the funding of 2nd, 3rd, 4th or 5th position loan. Given that the merchant cash advance providers use not a credit score based model but a cash flow based process, the overall processes are different. They cater to any type of business of any size. Even the bankruptcy conditions can be handles by these businesses. These easy funds would be available in a short time after the application is given.