Purchasing Supplies: Keeping Stocked Without Straining Finances

October 5, 2017 by CNH Finance, LP in category “Financing”

Purchasing supplies is a necessary part of regular operations and necessary for growth and seasonal rushes. However, even though purchasing supplies can impact finances, there are many ways to get the working capital necessary without placing a strain on cash flow.

Purchasing Supplies With Merchant Cash Advances

Merchant cash advances are aimed at small and seasonal businesses. The idea behind merchant cash advances is that businesses get an advance in capital to purchase supplies, without debt. This makes merchant cash advances seem very attractive to businesses that do not want to take out loans for buying supplies. What is not explained to business owners is how expensive merchant cash advances are in the long run. Merchant cash advances do not have locked payment schedules. Instead, every time a customer makes a transaction and pays via credit card, a small percentage from the sale goes toward repaying the balance of the advance. However, with high interest rates and hidden fees, businesses are usually left with a large balloon payment at the end of the terms of the agreement. While merchant cash advances may seem very appealing when purchasing supplies, businesses can feel an enormous strain on finances when the terms of the agreement expire.

Purchasing Supplies With Loans

Loans are another method of purchasing supplies. Loans were once the mainstay of businesses across all industries, but have since fallen by the wayside due to their overall inefficiency. Business owners do not see the sense in taking on debt just to get the supplies necessary to continue regular operations. Additionally, there is no logic behind taking out loans for seasonal rushes if a good portion of the revenue generates goes toward paying of the balance for years to come. Loans also take a long time to process, which means that if businesses need supplies for time-sensitive reasons, the red tape of traditional lending institutions can leave entrepreneurs high and dry, unable to fulfill customer requests because of the time it takes to process loan applications and disburse funds.

Purchasing Supplies With Asset Based Lending

Asset based lending provides entrepreneurs with a revolving line of credit structured around the value of assets owned by their businesses. Instead of relying on expensive merchant cash advances or loans, asset based lending is affordable, flexible, and can be arranged quickly. Because asset based lending acts as a revolving line of credit, businesses only access the capital they need, instead of being forced to take on one large sum or taking on unnecessary debt.

If you need capital to purchase supplies for your business, contact the experts at CNH Finance today.

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