If the product range is well positioned and the number of customers is increasing, the stock level is also reduced and new goods need to be ordered. If these cannot be financed through the sale of existing goods, a quick and simple financing option is needed to pre-finance the new goods. In this series, we will explain what options are available and what advantages and risks each financing method entails.
Pre-financing of new goods by means of factoring
If you want to increase the liquidity of your company in the short term, factoring can be an interesting financing solution. The basic prerequisite for being able to use profit from factoring is a service rendered or a product delivered to a customer. The company issues an invoice to its customer and then turns to a factoring company. The factor pays the invoice amount to the company, less a fee. The factoring of the receivable allows companies to obtain short-term liquidity to pay suppliers, for example. Otherwise, they might have to wait weeks or even months for the customer to pay.
Pre-financing of goods with fulfin
fulfin is a newly developed type of financing especially for e-commerce sellers. Here, no invoice previously issued to a customer is required, but a loan is paid out flexibly. In addition, a loan can be applied for easily, online and quickly via the fulfin credit app. In addition to the actual products, future cash flow, a personal guarantee or global assignment can also be used as collateral.
Subsequent financing in the sense of inventory financing is also possible by means of fulfin. In this way, the costs for the entire purchase of goods, but also the transport and storage costs - i.e. all procurement expenses for the procurement of goods - can be covered. In addition, the fees incurred in the course of repayment are usually lower than with factoring.
fulfin vs. factoring - 3 advantages at a glance
- Factoring contracts are often concluded with a term of at least one year, which suggests a high degree of dependency. fulfin, on the other hand, offers flexible financing solutions with individual terms.
- Moreover, factoring can only cover a small part of the financing cycle - from the sale of the supplier receivable to the settlement of the invoice. Financing goods with fulfin, on the other hand, can financially bridge the entire cycle from procurement or purchasing to the actual sale of goods. No issued invoice is required and the loan amount can be flexibly selected.
- Factoring banks also often have difficulty financing all receivables when they originate from a marketplace, such as Amazon. Those few banks that can offer this feature are usually expensive and often only available to large customers. Merchandise financing via fulfin, on the other hand, is specifically adapted to the requirements of the e-commerce business. By means of integration, existing seller accounts can be easily connected to the fulfin credit application - all required data is thus automatically transferred.