Medical Distributors: Keeping Supply Chains Running

August 30, 2018 by CNH Finance, LP in category “Financing”

The medical industry relies on accurate logistics and robust supply chains. Without medical distributors, clinics, private practices, and large healthcare centers would not have access to the equipment, pharmaceuticals, and other supplies which are necessary to treat patients effectively and efficiently. Yet, in order to keep those supply chains running, medical distributors need a reliable source of working capital.

Loans Hinder Medical Distributors

When capital is tight, but orders still need to be filled, businesses turn to bank loans. Unfortunately for medical distributors, traditional loans are counterproductive. Distributors take a hit to their credit ratings and have to take on debt to access the capital needed to keep supply chains operational. The capital is finite, so after it is used, there is no guarantee that things will run smoothly. More often than not, the same issues arise, which results in taking out additional loans. Debt-based financing creates a vicious cycle which can result in scaled back productivity or even bankruptcy. Medical distributors need a reliable and renewable source of capital without the burden of debt.

Overcoming the Need for Working Capital

Instead of loans, medical distributors are utilizing asset based financing solutions. Asset based financing unlocks the value of items owned by a business, such as vehicles, inventory, receivables, and more, to create a revolving line of credit. Asset based financing does not place any debt on the balance sheet, and allows medical distributors to preserve their credit ratings. The revolving line of credit can be used to purchase supplies, make payroll, pay down existing debt, or anything else needed to keep a distributor running efficiently and effectively.

Helping Growing Businesses

The demand placed on medical distributors is projected to increase over the next few years and into the 2030s. With more people aging and needing care, and a growing healthcare industry, medical distributors need to prepare for increased orders. Asset based financing offers the only solution designed to grow with businesses. As inventory and other assets increase, so too will the amount of financing available. This will keep distributors from having to rely on debt-based financing and allow them to grow to meet future demands.

CNH Financing provides asset based financing solutions to all aspects of the healthcare industry. To learn more about how we can help your business, contact our offices today.

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