Inventory Carrying Costs Explained

Posted on by Amanda Levine

Businesses often become hyper fixated on the cost of inventory itself, overlooking the high costs associated with storing and handling the inventory, also known as inventory carrying costs. These costs often grow due to insufficient or inadequate inventory levels, such as overstocking. Another root cause of inventory issues is the strain of cash flow. As businesses allocate most of their cash to holding inventory, other areas of operations suffer such as inventory tracking systems. 

Failure to properly manage carrying costs can greatly impact profitability and unnecessarily tie up existing cash flow. As you can see here, it’s critical to understand all the costs associated with inventory and operations while maintaining healthy cash flow. One way to overcome challenges is to access more working capital or inventory financing, which may sound like an impossible and costly activity, until you discover Kickfurther. 

What are inventory carrying costs?

Inventory carrying costs, also known as holding costs, are the expenses associated with storing and handling inventory before it sells. Storing inventory isn’t cheap and costs vary depending on the size of the business and inventory levels, but typically come out to about 20-30% of total inventory value. This can greatly impact your businesses profitability and increases the longer inventory is stored. Beyond the monetary cost your business can see from inventory carrying, it can also have opportunity cost and force you to turn down growth opportunities due to tying up your companies resources in inventory. 

Why inventory carrying costs are important for businesses

Understanding and managing inventory costs is crucial for businesses to maintain financial health. In order to project accurate profit margins, operating costs, and other figures that impact the financial health of your business, you’ll need to understand inventory carrying costs. If costs are high it can lead to reduced profitability and cause cash flow pinches, having the  potential to impact your bottom line. If you can recognize costs are high, you can take measures to improve efficiency and reduce costs. 

By determining just how much you spend on storing and handling inventory, you can then adjust your operations accordingly to mitigate the costs. While we’re sure you already see the importance, here are a few more reasons why inventory carrying costs are so important for businesses to understand:

  • Production planning: Knowing how much you spend on storing inventory can lead to changes in production schedule. If a product can be manufactured quickly, you can keep less inventory on hand and restock as the orders come in. You can also determine those top selling products with lower carrying costs and may decide to keep more inventory on hand.  
  • Inventory accounting: As inventory is often a businesses largest expense, having a clear depiction of carrying costs will lead to more accurate accounting. 
  • Profitability of existing inventory: With carrying costs being such a high percentage of overall inventory costs, tracking the value of holding costs per product can help you better determine the profitability of each product. 

Benefits of managing inventory carrying costs effectively

Managing inventory carrying costs effectively offers several benefits for businesses. As inventory carrying comes with a variety of expenses, if  managed correctly, businesses can reduce overall expenses and improve profitability. As fellow business professionals, we know this is always the mission. Beyond that though, here are some of the benefits that can result from managing inventory carrying costs effectively:

  • Improved accuracy 
  • Accurate financial statements
  • Proper pricing adjustments
  • Ability to identify opportunities of improvement
  • Free up working capital or identify the need for more

Tracking costs can be a complicated task as there are many moving parts and expenses. Regardless of how sophisticated internal systems are or are not, always be sure to give the level of effort tracking expenses deserves. Shortcutting this as it relates to inventory or operations can negatively impact business. 

Components of Inventory Carrying Costs

In order to understand how to effectively manage inventory costs, it is crucial to understand the components of inventory carrying costs. Here are some common inventory carrying costs: 

  • Storage costs: Storage costs are as they sound. Think of expenses related to rent or lease payments for warehousing or storage facilities, utility bills, property taxes, insurance, and maintenance costs.
  • Capital costs: Also referred to as opportunity costs, these are the expenses related to tying up capital in inventory. It includes the cost of financing inventory, such as interest on loans or the opportunity cost of using that capital for other investment purposes.
  • Obsolescence costs: When inventory becomes outdated, obsolete, or spoiled, businesses face costs associated with disposing of or writing off the value of such inventory. This can occur due to changes in technology, market trends, or product expiration.
  • Insurance costs: Inventory may be covered by insurance against potential losses, theft, or damage. Insurance premiums form a part of the carrying costs.
  • Handling and labor costs: Expenses related to labor, equipment, and utilities used for handling, moving, and managing inventory within a warehouse or storage facility. This includes wages, benefits, equipment maintenance, and utilities required for inventory handling.
  • Depreciation: If inventory items are subject to depreciation, such as goods that may lose value over time, the decline in value is considered as a carrying cost. Depreciation can be tracked on the income statement and can be tax-deductible – even more of a reason to track it closely and accurately. 
  • Risk of shrinkage: Inventory shrinkage refers to losses due to theft, damage, spoilage, or errors. The cost of such losses is included in the carrying costs.
  • Taxes: Businesses may be subject to certain taxes, such as property taxes or inventory taxes, based on the value of the inventory held.

How to calculate inventory carrying costs

To calculate inventory carrying costs, you will need to consider the various factors that contribute to the overall cost of holding inventory that are identified above. Once you add up the expenses for a particular product over a specific period of time (typically monthly or yearly), you can then divide those carrying costs by the total inventory value. You can then multiply that number to get a percentage, using the equation below:

Inventory carrying costs = Costs of storage / Total inventory value (over specific time frame) x 100

This calculation will help you determine which products have a higher percentage of associated  carrying costs and identify those products that are more profitable. It will also help you reevaluate certain processes and practices to ensure you are maximizing profitability. If you have inventory management systems in place, they should be able to generate reports and track expenses as needed. If you don’t find manual methods to bridge the gap until you have funds available to improve efficiency. 

Need more working capital? Visit Kickfurther today. 

Tips for Managing Inventory Carrying Costs

Is your business feeling the impacts of high inventory carrying costs? First and foremost, these costs can be reduced by maintaining optimal inventory levels and minimizing inventory on hand. Avoid excessive stock that ties up capital with storing inventory, but make sure you still keep enough inventory on hand to meet customer demand.Here are some tips that can help you manage inventory carrying costs:

#1. Slow down: Slowing down to invest time into accounting for expenses, analyzing efforts, and identifying areas of improvement can help manage carrying costs as well as improving the bottom line.

#2. Use demand forecasting: Knowing exactly how much inventory to stock and when can help make inventory costs more manageable. Avoiding overstocking inventory can also make inventory management more feasible. 

#3. Access more working capital: A lack of working capital can stretch business owners thin causing them to overlook important activities. While you should understand costs and have efficient inventory management in place before securing funding, there’s always room for improvement. For affordable working capital that allows you to maintain equity and avoid taking on debt, turn to Kickfurther. A solution created by entrepreneurs for entrepreneurs. 

Benefits of Effective Inventory Carrying Cost Management

Effective management of inventory carrying costs comes with a wide range of benefits that can improve your business. When done right, it can reduce overall expenses and improve profitability, freeing up additional working capital. With better cash flow, your business can take advantage of growth opportunities and improve operations. By effectively managing holding costs you can also minimize the risk of stockouts and improve order fulfillment rates, which can lead to higher customer satisfaction. A business that manages inventory carrying costs can gain a competitive edge, achieve better financial stability, and are better positioned for growth and success.

Conclusion

When effectively managed,  businesses who reduce or can properly account for  inventory carrying costs can see financial health improve. Plus, the ability to identify areas of improvement can directly impact the bottom line. . . success feels so good doesn’t it? As you navigate the land of business ownership, you may find you need more access to working capital. Inventory can tie up a lot of cash, thus leaving finances too tight to invest in inventory management systems, labor, and other important  activities. While you may stray away from funding at first due to past experiences or beliefs, Kickfurther offers a solution that truly works to help grow your business. Our platform connects business owners to a community of backers that can fund up to 100% of inventory. Business owners can maintain control and devise repayment plans that work for them. 

  1. No immediate repayments. You control repayment. Don’t pay until your product sells.
  2. Non-dilutive. Maintain equity in your business, we know how hard you worked for it. We are here to work with you, not against you. 
  3. Not a debt. Because you have enough financial strain, this is not a loan. 
  4. Upfront capital. Pay suppliers faster with upfront capital, there when you need it. 

To get started, create a free business profile today!

How to Get Working Capital For Retail Inventory

Posted on by Amanda Levine

Working capital in retail business funds day-to-day operations. As money comes and goes, it’s important to properly plan and balance accounts to ensure cash flow is healthy. To maintain healthy cash flow, retail businesses often need to utilize funding for large expenses such as inventory. If cash is tied up in inventory, this can cause a dilemma for working capital. Especially when you factor delays in payment for inventory and the need to replenish it. If we back this up a few steps, there’s also the problem that you might just not have enough working capital to stock inventory. 

So, how do you get working capital for retail inventory? Retail inventory financing is available (as you may already know), but you’ll want to carefully approach how you secure it. As a small business you may face strict requirements and high costs associated with inventory financing. In fact, we know this reality all too well as it’s the challenges of inventory financing for small businesses that began our mission. 

At Kickfurther, we help small businesses obtain working capital for retail inventory – for up to 30% less than other options. Plus, it’s not a loan nor does it require the business owner(s) to give up equity, thus truly supporting the business you’ve worked so hard to build. We put you in control, as you’ve worked too hard not to be. If the idea of getting inventory now and paying later entices you, keep reading to learn more about how to get working capital for retail inventory. 

What is working capital?

The difference between a business’s current assets and current liabilities. . . aka working capital. A very simple concept that holds a lot of weight. Working capital represents cash available to fund day-to-day operations, such as paying off short-term obligations and funding inventory purchases. Working capital is an essential measure of a company’s liquidity and financial health. Afterall, companies can have healthy sales but without working capital they are at risk. While working capital is more complex than the formula to do so, for reference, here’s how you calculate working capital:

  • Current assets – Current liabilities = Net working capital.

In order to effectively calculate your businesses working capital, it’s important to know your monthly inflows and outflows of cash on hand. Maintaining an appropriate level of working capital is crucial for ensuring smooth operations, managing cash flow effectively, and meeting financial obligations in a timely manner. Without it, you may need to rely on external financing or take measures to increase your working capital, such as reducing inventory levels (an option you likely don’t want to deploy). 

Why working capital is important for retail businesses

Retail businesses often need more working capital as they must have inventory to sell. It’s not that working capital is more or less important for retail business, it’s that retail businesses often face more of a challenge managing working capital. Working capital can directly impact a retailer’s ability to manage daily operations, meet customer demand, and generate revenue. Here are a few reasons how working capital can benefit retail businesses: 

  • Covering short term operational needs: Working capital provides the necessary funds to cover day-to-day operational expenses such as rent, utilities, marketing, maintenance, and other overhead costs. It ensures that a retail business can continue its operations smoothly without disruptions.
  • Inventory management: Retail businesses rely on inventory to generate sales and revenue. Working capital allows retailers to purchase and maintain optimal levels of inventory. Plus, it ensures that there is enough stock available to meet customer demand while maintaining other areas of operations. 
  • Technological advancements: In the rapidly evolving retail industry, technological advancements play a crucial role in improving efficiency, customer experience, and competitive advantage. Working capital enables retail businesses to invest in technologies such as point-of-sale systems and e-commerce platforms. These investments can streamline operations, enhance customer engagement, and drive growth. 
  • Payroll costs: Employee wages and benefits constitute a significant portion of a retail business’s expenses. Working capital ensures that a retailer can meet its payroll obligations regularly and on time, thereby maintaining a motivated and productive workforce.
  • Setting up new retail locations: If a retail business plans to expand by opening new stores or locations, working capital is vital. It provides the necessary funds to secure lease agreements, renovate or build new store spaces, purchase initial inventory, and cover other startup costs. Sufficient working capital supports the successful launch and initial operations of new retail locations.
  • Equipment: Retail businesses often require various equipment, such as display shelves, cash registers, refrigeration units, computers, vehicles,  and security systems. You’ll need cash available to purchase the equipment you need to run your business. 

Options for working capital for retail inventory

A common choice for retail businesses is inventory financing as it can solve working capital issues and provide other benefits as well. Plus, there are usually more options for inventory financing since it’s secured by inventory. This means it can be easier for small businesses to qualify. As you explore options consider the costs and overall impact on the business, good and bad. Here are some options you can look into for working capital for retail inventory:

  • Inventory financing 
  • Term loans
  • Line of credit 
  • Small Business Administration (SBA) loans 
  • Invoice financing 
  • Merchant cash advances

How to Prepare for Working Capital Financing

As you prepare to obtain working capital financing, there are a few things you’ll want to address:

#1. Analyze your inventory: Before requesting a loan or funding for inventory you should have a pulse on current sales, demand, trends, and so forth. 

#2. Determine how much working capital you need: You’ll need to determine how much working capital you need. If funding is for inventory this may be in terms of your next order. Oftentimes backers or lenders will pay suppliers directly so you’ll want to have your ducks in a row to make things as seamless as possible. 

#3. Choose the option that’s best for you: As a business owner, you are responsible for big decisions on a regular basis. Working capital financing is no different. Be sure you compare options and find one that works for you. If working capital financing is going to put strain on your business, it may just not be the right option. Choosing an option like Kickfurther allows you to control repayment terms, maintain equity in your business, and keep debt low since it’s not a loan. 

At Kickfurther you can get inventory now and pay later, all while having fun doing so. Our platform connects business owners to a community of backers that can fund up to 100% of inventory. 

  1. No immediate repayments. You control repayment. Don’t pay until your product sells.
  2. Non-dilutive. Maintain equity in your business, we know how hard you worked for it. We are here to work with you, not against you. 
  3. Not a debt. Because you have enough financial strain, this is not a loan. 
  4. Upfront capital. Pay suppliers faster with upfront capital, there when you need it. 

Tips for Successfully Securing Working Capital Financing

Securing working capital can be essential to a retail business’s success. However, especially for smaller businesses, it can be difficult to obtain the working capital financing needed to grow your business. In order to make sure you are ready to successfully secure the financing you need, here’s some tips. 

  • Make a plan (think long-term)
  • Organize documents
  • Keep a close eye on cash flow 
  • Keep your foot on the accelerator. 

Our most valuable tip though. . . choose Kickfurther for working capital inventory funding!

Closing thoughts

Retail businesses owners have enough to worry about and working capital is often at the top of the list. By taking advantage of working capital financing, you can free up the cash flow you need to grow your business and ensure you meet your day-to-day obligations. 

At Kickfurther, we understand the importance of having cash on hand and want to make sure your business is operating at the level it should be. Let us help you get affordable working capital, so you can get back to putting your cash where it matters most – growing your business! 

Interested in getting funded at Kickfurther? Here are 3 easy steps to get started:

#1. Create a free business account

#2. Complete the online application 

#3. Review a potential deal with one of our account reps & get funded in minutes

How to Calculate & Improve eCommerce Profit Margins

Posted on by Amanda Levine

For your business to truly be successful in the world of eCommerce, you need to maximize profit margins. But, before you can work on maximizing profit margins, you’ll first need to learn how to calculate and improve them. 

Profit margins aren’t just a key indicator of a company’s financial health — they also help business owners make decisions related to the pricing and inventory management of the company.

When it comes to increasing profit margins for your eCommerce business, Kickfurther can help. From our business blogs such as this one or 5 Ways To Increase Profit Margins to our inventory funding platform that puts you in control, we are here to work with you – not against you! Plus, we know how hard you work to achieve healthy profit margins and for that we offer inventory funding up to 30% cheaper than other options. The more you learn about us, the sooner you’ll be headed over to start your Kickfurther success story. 

Keep reading to learn how you can improve your eCommerce profit margins with Kickfurther. 

How to Calculate eCommerce Profit Margins

To calculate your profit margin, you can subtract the amount of revenue generated from the cost of running a business. The difference is what your profit margin is.

The formula can be written out like this: 

Total revenues – the cost of goods sold = profit margin. 

While the formula for calculating a profit margin isn’t innately hard, many business owners can have trouble accurately tracking and figuring out what their exact cost of goods sold is. It can be easy to omit certain expenses or round up and estimate certain areas, which results in incorrect calculations and skews business plans. 

That’s why ensuring you’re correctly calculating your profit margin is crucial to staying informed and making the right business decisions based on accurate information. 

Top factors that influence eCommerce profit margins

Each business will have different considerations and expenses to manage when it comes to increasing their profit margin. Since several factors ultimately impact your bottom line, it can help to really understand what factors into an eCommerce profit margin. Here are some of the top factors that influence eCommerce profit margins. 

#1. Pricing strategy
Your pricing strategy is, of course, directly linked to the profit margin you generate. If you set prices too low, you could get higher sales but generate less overall profit. On the other hand, high prices impact the amount of sales you get. eCommerce business owners have to find the sweet spot to attract customers and drive sales, but ultimately generate a profit. 

#2. Cost of goods sold (COGS)
When you produce or purchase costs for your eCommerce company, the cost of Goods Sold (COGS) are a key factor in determining profit margins. If you’re looking to decrease your COGS, you can try to lower your production costs or find a more affordable supplier. This is where strategies around inventory management are crucial to finding efficiencies and improving your profit margin. When we talk about reducing costs we always like to remind business owners to avoid shortcuts that will have negative impacts. Typically cutting costs really comes down to just operating more efficiently. 

#3. Shipping and handling fees
Whether you pay for the shipping and handling fees or you make your customers pay, they ultimately impact your bottom line. Plus, you’ll need to factor fulfillment as well. Ensuring products arrive promptly and in good fashion is an important part of operating a successful eCommerce business. 

#4. Advertising and marketing costs
Spending money on advertising and marketing costs can help you grow your business and generate sales. But, inefficient spending or campaigns that fall flat can impact your profit margin. As can successful campaigns too. 

3 Tips for improving eCommerce profit margins

While profit margins can vary by industry, the average eCommerce profit margin should be between 50 and 70%. If you’re not calculating your profit margins as an eCommerce entrepreneur or aren’t falling within the recommended ranges, there are a few ways you can improve your profit margins so you can keep more money in your pocket and increase profit margins. 

#1. Reduce costs
The simplest and most obvious way to increase profits is by reducing your overall costs. Implementing cost-cutting measures like reducing overhead costs, finding more efficient shipping methods, and streamlining operations can immediately impact your profit margins. 

For example, you can try to negotiate better shipping rates or utilize more cost-effective shipping options. However, you don’t want any cost-saving efforts to impact your product’s quality or your customer’s experience.

#2. Negotiate with suppliers
While it might be daunting, re-negotiating your agreements with suppliers can really help increase profit margins. 

The best way to do this? Focus on building long-term relationships with your vendors. When you’ve shown your commitment to the business, on-time payments and regular communication, a vendor might be more likely to offer flexible payment terms or decrease pricing. 

Ordering in large quantities may help you earn a discount too. To access working capital in order to be able to financially afford to order more inventory and or pay faster, consider inventory financing. 

#3. Automate processes
Another way you can try to increase your profit margins is by automating specific processes to reduce costs. Implementing software to help with inventory management, order fulfillment, and customer service can help you save money and therefore increase profit margins. 

Want more tips? Read 5 Ways To Increase Your Business Profit Margins

Benefits of inventory financing for eCommerce businesses

If you’re looking for a way to increase your profit margins without making other sacrifices to your goods or service,  inventory financing for small businesses can help. With inventory being the largest expense for most eCommerce business owners, decreasing your inventory expenses can immediately help improve the amount you earn from each transaction. 

When entrepreneurs use Kickfurther, they can: 

  • Increase their cash flow: With less money tied up in inventory, business owners can maintain healthy cash flow and invest in other areas of growth.
  • Improve inventory management: Whether you’re preparing for a busy season and need to stock up on inventory or you’re worried about weathering a down period, inventory financing can help you improve your inventory management costs. Invest more in improving operations and less time worrying about what you can and can’t “afford.”
  • Spend on more strategic initiatives: With more working capital, you’ll be able to invest in strategic initiatives. The things you once overlooked can soon become a focus that can transform the way you do business.
  • Develop a payment structure that works: While we can’t speak for all means of inventory financing, we can speak for our own platform. At Kickfurther, business owners are in full control down to controlling repayment schedules. Because we know in business and in life, we have to make things work for us. It’s no surprise that our team of entrepreneurs is all for creative solutions to make things work.

Closing thoughts

Maximizing profit margins for your eCommerce business is crucial to the financial health and success of your company. Not only can it help improve your operations, but you’ll also be able to grow your company and use your capital the way you want — not just on inventory.

With Kickfurther, you can grow your business and have more fun while doing so. Our inventory now, pay later model ensures you can get the working capital you need to purchase inventory but only pay for what you sell. Our platform connects business owners to a community of backers that can fund up to 100% of inventory. No tricks, no gimmicks, just good business practices. Kickfurther’s value proposition:

  1. No immediate repayments. You control repayment. Don’t pay until your product sells.
  2. Non-dilutive. Maintain equity in your business, we know how hard you worked for it. We are here to work with you, not against you. 
  3. Not a debt. Because you have enough financial strain, this is not a loan. 
  4. Upfront capital. Pay suppliers faster with upfront capital, there when you need it. 

Take advantage of the opportunity to grow your business and watch profit margins thrive. Create a free business account at Kickfurther today!

Key Metrics Your Consumer Goods Company Should Measure

Posted on by Amanda Levine

Key metrics for consumer goods sellers should provide an accurate overview and measurement of your company’s performance, productivity and  how effectively your business’s marketing efforts are working. Understanding how to use these metrics can help you set marketing strategy while managing your inventory and identifying where improvement is needed.

Best metrics your consumer goods company should measure

Your company should measure metrics because the results can measure performance and help to plan and set marketing strategies and goals. The most helpful metrics to measure are:

Customer Acquisition Cost (CAC)

Customer acquisition cost (CAC) is a metric used to track the total amount you spend when converting a lead into a paying customer. It evaluates  the cost of sales and your marketing spend. CAC tells you if your marketing efforts are working and if your investments in customer acquisitions are yielding results. It can be calculated by adding the cost of sales and marketing over a specific period of time and dividing this sum by the number of new customers during the same time period. The amount of money you spent getting a new customer is the result. Lower CACs mean you are using fewer resources to get new customers. Higher CACs mean your acquisition strategy isn’t working.

Sales Revenue and Growth

Sales revenue should include the total amount of money generated through product sales. Measuring sales revenue can provide insights on the effectiveness of your  pricing strategy and the demand for your products.

Customer Lifetime Value (CLV)

Customer Lifetime Value is the amount of revenue a customer is expected to spend over the course of a lifetime with a specific company. The relationship of a company’s LTV to CAC ratio serves as a gauge of the effectiveness of their marketing strategy. By using LTV, a company can focus on creating long-term customer relationships.

Inventory Turnover

Inventory turnover measures how quickly inventory is being sold and replaced. Higher turnover rates mean products are in high demand.

Optimize inventory management to avoid excess stock or stockouts, reducing holding costs and maximizing sales.

Align inventory with demand and increase your inventory accuracy while improving your forecasting capabilities.

  • Analyze demand: Use historical sales data, market trends and customer feedback to predict demand and identify patterns. Use this information to adjust your inventory level and order quantities accordingly.
  • Set reorder points: Determine the minimum quantity of each product needed to fulfill customer demand and set a reorder point to ensure you have enough stock on hand to meet demand without carrying excess inventory.
  • Automate inventory tracking: Use inventory management software to automate inventory tracking. Monitor sales and vendor lead times to help identify inventory levels, sales trends and to help identify potential stock outs before they happen.
  • Implement just-in-time inventory management: This is a system where inventory levels are kept to a minimum and replenished only when needed. It reduces holding costs ensuring you have the needed inventory ready to meet customer demand.
  • Implement effective forecasting and replenishment strategies: Use forecasting tools to predict inventory needs and ensure timely replenishment. This will help reduce stockouts and overstocking ensuring that you have enough inventory on hand to meet customer demand.

Return on Investment (ROI)

ROI measures the return on investment of specific marketing campaigns to allow your company to assess the effectiveness of marketing expenses.

Customer Satisfaction and Loyalty

Customer satisfaction is measured by how satisfied customers are with the company’s products and services. This also allows your company to make necessary improvements to increase customer loyalty and boost sales.

Distribution and Channel Performance

Distribution performance measures how effectively products are delivered from manufacturers to customers using various channels like retailers, wholesalers or ecommerce platforms. Channel performance is the ability of a company to successfully reach and engage with customers through various distribution channels like online platforms, physical stores or third-party resellers. It includes factors like marketing, advertising, customer service and brand reputation. Reaching and engaging with target customers is key to successful distribution and channel performance.

How Kickfurther can help

Kickfurther funds up to 100% of your inventory costs on flexible payment terms that you customize and control. With Kickfurther, you can fund your entire order(s) each time you need more inventory and put your existing capital to work growing your business without adding debt or giving up equity.

Why Kickfurther?

No immediate repayments: You don’t pay back until your new inventory order begins selling. You set your repayment schedule based on what works best for your cash flow.

Non-dilutive: Kickfurther doesn’t take equity in exchange for funding.

Not a debt: Kickfurther is not a loan, so it does not put debt on your books. Debt financing options can sometimes further constrain your working capital and access to capital, or even lower your business’s valuation if you are looking at venture capital or a sale.

Quick access: You need capital when your supplier payments are due. Kickfurther can fund your entire order(s) each time you need more inventory.

Kickfurther puts you in control of your business while delivering the costliest asset for most CPG brands. And by funding your largest expense (inventory), you can free up existing capital to grow your business wherever you need it – product development, advertising, adding headcount, etc.

Closing thoughts

By tracking and analyzing consumer goods sales metrics and using Kickfurther inventory financing, you can achieve the financial flexibility to expand your inventory and free up capital to grow your business successfully. Let Kickfurther be your inventory funding partner.

Guide to SBA Loans

Posted on by Amanda Levine

Securing funding for your business in order to fuel growth can be challenging. Insufficient funding may hinder your ability to implement growth strategies such as increasing your range of products, expanding marketing campaigns, or hiring qualified staff. 

Some options to alleviate your cash flow pinch are to apply for an SBA loan or inventory financing. Combining inventory financing and inventory factoring can be a wise strategy to increase your working capital.

Kickfurther is the world’s first online inventory financing platform that empowers small businesses to access funds that may be inaccessible from traditional sources. We connect brands to a community of eager buyers who help fund inventory while giving brands the flexibility to pay it back as they receive cash from their sales. This eases the strain on cash flow so brands can scale quickly without limiting financial flexibility or inventory. 

What is an SBA loan?

An SBA loan is a loan for a small business that is backed by the U.S. Small Business Administration (SBA). SBA loans are designed to help small businesses gain access to financing that they might not otherwise be able to get from traditional lenders. The SBA provides a guarantee to the lender that it will cover a portion of the loan if the borrower defaults. This guarantee encourages lenders to make loans to small businesses that might be considered too risky otherwise. SBA loans may have more flexible payment terms and can be used for a variety of purposes, including working capital, equipment purchases, real estate acquisitions, and other business expenses. Terms and conditions of SBA loans can vary depending on the specific program and the lender, but they typically have longer repayment terms and lower interest rates than traditional bank loans.

How SBA loans work

The SBA guarantees business loans from lenders.  This encourages banks to finance businesses that might not be approved for a loan in other circumstances. The process to obtain an SBA loan may take longer than the process for inventory financing.

Types of SBA loans

  1. 7(a) Loan Program: This is the SBA’s flagship loan program and is the most popular program offered by the SBA. It offers flexible financing for a variety of business purposes, including working capital, equipment purchases, real estate, and debt refinancing. This program allows a maximum loan amount of up to $5 million.
  2. CDC/504 Loan Program: This loan program provides long-term, fixed-rate financing for small businesses for the purchase of fixed assets ,like land, buildings, and equipment. The maximum loan amount allowed under this program is $5.5 million. In most cases, owners need to guarantee at least 20% of the loan. These loans are made through the SBA’ s community-based partners called Certified Development Companies (CDCs). The funds cannot be used to buy inventory, consolidate debt or as working capital. 
  3. Microloan Program: Small businesses can receive loans of up to $50,000 through the Microloan program, which aims to assist them with startups and expansion. This loan program provides capital for minorities, veterans, women and low-income entrepreneurs. It provides access to capital for underserved communities through not-for-profit lenders. The program boosts funding for small businesses and non-profit organizations that have insufficient collateral and a limited credit history.
  4. Disaster Loan Program: This loan program provides long-term, low-interest loans to small businesses that have suffered physical or economic damage due to a declared disaster. After a disaster, the SBA determines whether businesses qualify for compensation under the Disaster loan program.

How to Qualify for an SBA loan

Lenders and loan programs have special eligibility requirements for SBA loans. The eligibility for each loan is based on the business location, the character of each borrower and what each business does to earn its income. Businesses need to have a sound business purpose, meet SBA size requirements and be able to repay. You will be matched  with an SBA-approved lender to find the best loan to start or grow your business. Even borrowers with bad credit may qualify for startup funding. Your lender can provide you with a full list of eligibility requirements to get your SBA loan.

How to Apply for an SBA loan

To apply, go to the SBA website or go to your local SBA office to fill out their loan application. To get an SBA loan, you will need to provide documents and information to verify your identity, personal and business history, creditworthiness, and legal documents to verify your business. This process can take up to several weeks.

Benefits of SBA loans

The benefits of  SBA-guaranteed loans include:

  • Competitive terms:  Guaranteed loans have rates and fees comparable to nono-guaranteed loans. 
  • Counseling and education: SBA loans offer continued support to help you start and run your business.
  • Other benefits: These include lower down payments, flexible overheard and no collateral needed for some loans. 

Tips to qualify for an SBA loan

  • Provide accurate financial statements: Gather and provide accurate financial statements to show your business’s financial stability. 
  • Consider your collateral: The SBA requires collateral for some loans such as real estate, equipment or inventory which may increase your chances of loan approval.
  • Build your credit score: A high credit score is an important factor in securing an SBA loan. 
  • Approach an SBA lender: Choose an SBA approved lender who offers a loan program that fits your business needs. Be ready to answer any questions..

SBA Loans vs. Inventory Financing

SBA loans are obtained from a lender and are backed by the U.S. Small Business Administration, which guarantees a portion of the loan. SBA loans offer lower interest rates than traditional bank loans and require more documentation to apply. The application process may be lengthy.

Inventory financing is a term loan where the lender provides a business owner with capital to purchase products so you can manage your inventory. The inventory is the  collateral to secure your financing and the revenue generated from these products repays your loan. These loans usually have shorter repayment terms and higher interest rates than SBA loans. This type of funding usually requires a track record of sales.

An advantage of inventory financing is that you can promptly and effortlessly respond to shifts in the market and your funds are quickly accessible. When considering whether to offer you funding, lenders usually only consider your invoice and account receivable values.

Your business will be better positioned for increased growth with inventory financing. The loan allows you to meet customer demand, upgrade products and can be helpful for seasonal businesses. Your cash flow stays unaffected by your inventory purchasing. Since your inventory secures the loan, your personal risk is lower. However, inventory financing usually has higher loan rates than SBA loans. If your credit score isn’t high enough, or your business is fairly new, you might not qualify for inventory financing. 

Inventory financing lines of credit, which are different from inventory financing loans, operate in the same way that a credit card does. They give borrowers funding they can draw from for their business needs. The business’s inventory secures the credit line. Inventory lines of credit are revolving and the line is replenished as you repay what you borrowed. You can only use the line of credit for inventory. 

How to qualify for Inventory Financing

These loans are relatively simple to apply for online, faster and you may not need as much personal credit or collateral to finance the loan. Most lenders will want a credit check, a business plan, financial statements to verify your sales and revenue, a list of inventory you plan to buy with pricing, and plans for storage of the inventory. 

Why combining invoice factoring with inventory financing is a good plan for your small business

Invoice factoring involves selling your accounts receivable at a discount. When you use invoice factoring, only your invoices and accounts receivable values are considered when a decision is made to offer you funding. Factoring allows you to choose the invoices to be included. 

Both inventory financing and invoice factoring are tools designed to improve your cash flow. Factoring has the ability to make the most significant and cost-effective impact, so it should be implemented first. Combining both Invoice factoring and inventory financing is the best way to  boost your working capital while supporting your business growth. 

Closing thoughts

Kickfurther provides small business inventory financing to help your small business respond quickly to market changes. You can receive up to 100% of the funds you need with flexible payment terms while you retain control. Without adding debt or giving up equity,  you can grow your business. Kickfurther doesn’t take equity in exchange for funding.

With Kickfurther, you don’t have to make payments until your fresh inventory order starts generating sales. You have the flexibility to structure your repayment plans according to your cash flow needs. With Kickfurther, you get quick access when you need capital so you can rapidly increase your inventory. By funding your inventory expenses,  you can free up capital to grow your business in other ways. 

Whether you are considering an SBA loan or inventory financing, it’s best to do your research to evaluate which financial product offers the best loan rates and terms. You want the best product that helps you achieve your business goals. 

Best Small Business Loan Options For Purchasing Inventory

Posted on by Amanda Levine

Inventory is a critical part of consumer packaged goods (CPG) brands. From properly managing it to delivering it and stocking just the right amount, you’ll want to perfect your inventory system early on. As sales grow, it can be challenging to navigate how to buy more inventory without inflicting low or negative cash flows. At some point you may need to entertain the idea of inventory financing for small businesses, or maybe you already have but got discouraged. 

Small businesses often think of inventory financing as the perfect solution until they learn more about it. With strict requirements and repayment periods and high costs, it can be more harmful than helpful, even though that’s not how it should be. 

Our founder, and entrepreneur, once encountered the challenge of inventory financing that actually worked to grow 

What are the different small business loan options available for purchasing inventory?

Educate yourself on the various options available for purchasing inventory. Options can include the following:

  • Business term loans: Funded as a lump sum, general business loans can be used for purchasing inventory. 
  • Business line of credit: A revolving line of credit can supply the funds you need on an ongoing basis to purchase inventory. 
  • SBA loans: Government-backed SBA loans are intended to help businesses cover expenses and help them grow.
  • Inventory financing: Designed for funding inventory, inventory financing is a top choice for businesses in need of funds to purchase inventory. 

How can small businesses determine the right amount of funding they need to purchase inventory?

Guessing is not an effective solution for managing inventory. To determine how much inventory to purchase you’ll need to closely track sales,  seasonal demand, and any activities that impact sales to understand how much inventory to stock and when to stock it. For example, the holiday season may cause sales to spike. Therefore, you’ll want to order more to be prepared for the season. Educating yourself about inventory management can help you get a pulse on how much inventory you need. 

Once you understand how much inventory you need, you can work on determining what it will cost you. When you’re ready to gather funding, visit Kickfurther to get started. 

Are there government-backed loan programs that offer favorable terms for small businesses acquiring inventory?

Under the SBA (Small Business Administration) loan program you’ll find the SBA inventory financing option. SBA loans are partially backed by the government and issued by SBA-approved lenders. Designed to provide favorable terms and funding for small businesses, you may want to consider this option. The pain points here though are usually the strict requirements and lengthy funding times. For businesses they need regular access to funding for inventory this may not be an ideal solution. 

How does inventory financing work, and what are its advantages for small businesses?

Generally, inventory financing is secured by the inventory purchased with the funds. Funding may go directly to the business or it can go toward the supplier. Depending on the lender or source of the funding, repayment terms can vary. 

At Kickfurther, our model works as follows:

  1. Create an online profile 
  2. Launch your deal to attract buyers 
  3. Get funding within minutes to hours 
  4. Set your ideal repayment schedule 
  5. Sell inventory and repeat the process when you’re ready again! 

After a successful round of funding with our community, it’s likely you’ll be able to get lower rates the second round. 

What documents and information should small businesses prepare when applying for inventory loans?

Similar to other loans, inventory loans usually require plenty of documentation. Before applying, make sure you can prove why you need the amount of inventory funding you’re requesting. Documentation that may be required can include the following. 

  • Bank statements
  • Business plan
  • Balance sheet
  • Sales history
  • Legal documents and licensing 
  • Budget
  • Tax returns 

Be able to prove to the source of funding that you can benefit from the funds and that you can live up to the promise of repayment. 

How long does it typically take to secure a small business loan for purchasing inventory?

Getting a business loan, for inventory or anything else, can require a lot of time, patience, and energy. With traditional methods getting inventory financing can take anywhere from a few business days to a few weeks (or even months for SBA loans). When funding runs out and you need more, the cycle starts again. If you use Kickfurther for inventory funding, getting more funding when you need it is streamlined. As a business owner your business and growth actions deserve all of your attention. We recognize how hard you work and hope to make inventory funding one less thing to worry about. 

Are there any alternative financing options or creative strategies to consider for inventory purchases?

As a business owner, creative strategies are probably your go to, we know they are at Kickfurther. Our platform is an idealistic example of a creative way that’s legitimate and safe to access the funds you need for inventory. Investors and alternative types of funding often prey on desperate business owners, which is wrong. Because we all deserve the opportunity to succeed, we’ve created a platform that levels the playing field. 

How does inventory financing work, and what are its advantages for small businesses?

Generally, inventory financing is secured by the inventory purchased with the funds. Funding may go directly to the business or it can go toward the supplier. Depending on the lender or source of the funding, repayment terms can vary. 

At Kickfurther, our model works as follows:

  • Create an online profile 
  • Launch your deal to attract buyers 
  • Get funding within minutes to hours 
  • Set your ideal repayment schedule 
  • Sell inventory and repeat the process when you’re ready again! 

After a successful round of funding with our community, it’s likely you’ll be able to get lower rates the second round. 

How Kickfurther can help

Kickfurther funds up to 100% of your inventory costs on flexible payment terms that you customize and control. With Kickfurther, you can fund your entire order(s) each time you need more inventory and put your existing capital to work growing your business without adding debt or giving up equity.

Why Kickfurther?

  • No immediate repayments: You don’t pay back until your new inventory order begins selling. You set your repayment schedule based on what works best for your cash flow.
  • Non-dilutive: Kickfurther doesn’t take equity in exchange for funding.
  • Not a debt: Kickfurther is not a loan, so it does not put debt on your books. Debt financing options can sometimes further constrain your working capital and access to capital, or even lower your business’s valuation if you are looking at venture capital or a sale.
  • Quick access: You need capital when your supplier payments are due. Kickfurther can fund your entire order(s) each time you need more inventory.

Kickfurther puts you in control of your business while delivering the costliest asset for most CPG brands. And by funding your largest expense (inventory), you can free up existing capital to grow your business wherever you need it – product development, advertising, adding headcount, etc.

Closing thoughts

What’s best for your business is something you’ll need to decide. What we know though is that there’s no shortage in demand for affordable inventory funding in the CPG world. 

Kickfurther can help small businesses obtain inventory funding for up to 30% cheaper than comparable options. Because growth mode is the only mode we know, we’ve created a platform for CPG brands to obtain the funding they need, in the manner they’ve always dreamed of. At Kickfurther you can get inventory now and pay later, all while having fun doing so. Our platform connects business owners to a community of backers that can fund up to 100% of inventory.