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Jana Pfeiffer May 28, 2020 2 Minutes
Categories: Finance - Categories | Financing Guide

If the product range is well positioned and the number of customers is increasing, the stock level will also be reduced and new goods will have to be ordered. If these cannot be financed by the sale of previous goods, a quick and easy financing option is needed to pre-finance the orders. In addition, bottlenecks can occur due to seasonal fluctuations, sudden strong company growth or other factors. In such cases, a short-term liquidity improvement by means of a loan is necessary.

In this series, we will explain what options are available and what advantages and risks the respective financing methods entail.

Finetrading purchase financing  

Finetrading is an alternative form of purchase or merchandise pre-financing in which the finetrader acts as an intermediary between the supplier and the merchant. From a legal point of view, finetrading is therefore not a credit transaction but a commercial transaction between three parties (supplier, trader, finetrader). The trader negotiates the terms of delivery, prices and other conditions with his supplier in advance. The order itself is then placed by the finetrader for his own account, but delivered to the merchant's destination. As soon as the merchant has approved the invoice, the finetrader pays the supplier - possibly using a discount. The seller, in turn, receives an extended payment term from the finetrader or the option of paying his liabilities by instalments.

Pre-financing of goods with fulfin 

fulfin, the pioneer of digital financing providers, has developed a new type of purchase financing with its fulfillment financing, especially for e-commerce sellers. Compared to finetrading, with fulfin there is no intervention in the relationship between supplier and retailer - the retailer negotiates independently with the supplier. 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. 
Furthermore, fulfin also offers the possibility of subsequent financing in the sense of stock financing. This means that the costs incurred can be covered irrespective of previous orders and the previous invoice total. In addition, the fees incurred in the course of repayment are usually lower than with finetrading.

fulfin vs. finetrading - 3 advantages at a glance 

  1. With the pre-financing of goods by fulfin, the supplier-dealer relationship is not affected. Since fulfin does not act as an intermediary in this financing solution, there is no need for a contract amendment or even a new contract with the supplier. The dealer negotiates the general conditions as well as the terms and conditions independently with the supplier and concludes a contract with him without fulfin being involved in this process. 
  2. In fulfin, although actual goods or future cash flow can serve as collateral, the capital does not necessarily have to be used for financing goods. The newly gained liquidity can serve as an improvement for general working capital or be used for the realization of long-term projects. In this way, fulfin guarantees flexibility and adapts to the circumstances of its customers. 
  3. In contrast to Finetrading, with fulfin's financing solution, the goods can be financed in advance as well as afterwards. In this case, liquidity can be released from goods that have already been purchased, whereas a finetrader can only finance the actual purchase of goods in advance, since an invoice that still has to be settled is required.

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