Sales Financing: What You Need to Know

Sales financing is a great way for sales people to leverage their sales efforts by not having to carry the full risk of inventory investment. There are many benefits to sales financing that sales people often overlook, and this article will help you understand what those benefits are. With sales financing, there is typically no upfront cost or fees associated with selling on credit terms; it can also increase your average order value; and it has the potential to improve customer satisfaction levels. Sales financing gives salespeople more time to focus on other aspects of their business, which helps them become more successful in general. This blog post will explain all of these points in detail so you know exactly what you're getting into if you want to use sales finance as an option for your

What is sales financing?

Sales financing allows small businesses to invest in equipment or inventory by borrowing against future revenue.

Who benefits from sales financing?

Business owners who do not have the cash on hand, but generate income quickly benefit most from this type of funding option. They can get access to money for their business without having to wait months before finalizing a bank loan application. Some common examples are: seasonal businesses that cannot secure loans during off seasons; new companies with complex accounting records (and thus slow approval time); and start up firms seeking capital expansion funds.

Who should avoid it?

Smaller-sized service providers typically rely heavily on sales financing to maintain their business. Service providers with fewer sales transactions per month are at high risk of not being able to repay sales financing loans in full on time; thus, can be forced into default and bankruptcy.

How do you get started?

Often times it is quick and easy process for businesses to secure sales finance funding once they have a steady flow of income coming in each month or quarter (depending on the term length). Most commonly, small businesses use online application processes that allow them to complete an application within minutes from start to finish.

What about interest rates?

Rates vary depending on credit history, revenue size/frequency, industry type etc., but generally range between 12% - 25%.

Are there any disadvantages?

Sales financing can be a quick and easy source of capital for your business, but it comes at the cost of high interest rates. Other disadvantages include: additional fees (e.g., origination fee), prepayment penalties if sales are not as strong as expected; monthly payment is less than regular installment payments over time; sales finance agreements usually have strict repayment schedules that could interfere with other financial obligations; sales companies need to understand how credit works in order to manage sales financing debt effectively.

Is this something you should look into?

If you do not know much about sales financing or what all the terms mean then consult someone who does before starting an application process. It is important to fully understand exactly what your company will be obligated to pay back over time. Sales financing can be a quick way of filling the sales funding gap for small businesses, but it is not without its own financial risks and issues that should be carefully considered first!