Definition of Inventory financing:
Inventory financing is useful for retail companies that need to pay for a fixed amount of inventory before selling it to their suppliers to customers. It is important to minimize the financial impact of seasonal fluctuations on cash flow. This can help a company increase sales volume, and allow it to purchase additional inventory if needed.
One type of asset-based loan is a short-term working capital loan obtained through purchased stock. When the stock turns into a sale, the debt is gradually paid off and (if fully satisfied) a new stock is purchased with a new loan, and the cycle begins again. The interest rate on financing stocks is usually higher than the interest rate charged on financing, as the goods were sold in the latter case. Also known as inventory credit.
Inventory financing is a revolving credit line or short-term loan that a company buys and then sells products to buy. The product acts as a loan guarantee.
How to use Inventory financing in a sentence?
- Inventory financing is a loan that a company obtains by paying for products that are not sold immediately.
- The loan is obtained through the stock used in the purchase.
- Inventory is often financed by small private companies that do not have access to other options.
Meaning of Inventory financing & Inventory financing Definition