Cash flow protection and predictability is a top priority for just about any business. For manufacturers and distributors of consumable assets, a revolving line of credit allows inventory of consumables to be maintained while enabling goods to be moved quickly without depleting cash flow.
Through a revolving line of credit, distributors can acquire inventory at the pace of the market and repayment terms can be aligned to income streams. This helps manufacturers move more product through the channel and drives the purchasing power of their distributors, allowing them to provide their customers with a wide selection of products that are available for immediate delivery.
Last year proved just how valuable it is to have that flexibility. For example, we saw a significant swing in demand for medical and dental consumables. Early in the pandemic, hospitals and health systems had an immediate need for more personal protective equipment and needed to acquire supplies as quickly as possible. Meanwhile, consumables for non-emergent needs – like dental implants and prosthetics – saw a drop in demand early on when elective procedures were halted, but then experienced a spike when they resumed. By extending a line of credit, manufacturers were able to protect their cash flow while demand ebbed and flowed, and distributors benefitted by acquiring and moving inventory at the pace of the market.
A revolving line of credit can also support predicted changes in income streams for things like seasonal consumable assets. For example, farm input dealers can purchase seeds from input manufacturers and/or distributors with a line of credit, aligning crop year expenses with revenues to improve cash flow. Or, a school can front load on copier toner before the start of the school year without depleting much needed funds. An ongoing, revolving line of credit can be key to maintaining consistency of funds despite the natural fluctuation of business expenses and revenues.
By partnering with DLL Commercial Finance, manufacturers may offer their partners a variety of flexible, tailored financing options to optimize their inventory and cash flow while moving more products through the channel and guaranteeing pay days.
Contact us to learn more about financing options for consumable assets.
