Inventory Factoring is a process where GMFC is contracted to purchase your required inventory.
GMFC would purchase up to 100% of your required inventory, using GMFC capital, in place of yours.
Client (You) Acquire inventory needed to grow, restocking shelves, increase order fill, develop new clients, and increasing your market share;
Leveraging all available supplier volume purchase and payment discounts, further impacting your margins, and bottom line.
You Acquire Inventory:
Inventory Need – Your Company requires $50,000.00 in inventory, it plans to sell for $100,000.00.
Get Funded – Following New Client setup, and Approval, GMFC will purchase the inventory, up to 100% or $50,000.00.
You’re in Control – You maintain, and control your supplier relationship, up to paying the Supplier Invoice, GMFC will pay your Supplier directly.
PO Approved – Once your Supplier has shipped your order, you have received the inventory, inspected for quality, quantity, and match to your PO, You Accept, and update GMFC that the PO is approved for payment.
Your Supplier is Paid – GMFC will pay your supplier directly, on your behalf.
Easy Reporting – GMFC will provide you a reporting mechanism to update GMFC, as you Sell or Consume the acquired Inventory.
As You Sell / Consume Inventory:
Units Used – You sell or consume these units, either through filling customer orders, or in production.
Rate of Usage – This usage could occur as a single gross sale, single production run, or over the expected / projected inventory unit turn rate, per the schedule / contract.
Report Usage – You report these units as used, via a regular simplified weekly report.
Report Monday – Each Monday, after your inventory is received, you would submit an update report to GMFC, covering inventory sold or used in production, over the preceding 7 days, begining with the prior Monday through Sunday, the day before the report is assembled.
Payment Friday – That following Friday, GMFC will ACH debit your bank account, based on the inventory used/ consumed report filed Monday.
Settle at Maturity – When all the inventory is sold or the contract schedule matures, whichever occurs first, final payment is made to clear that schedule, paying GMFC, via ACH debit to your bank account, covering the remaining unused units, and the schedule / contract is closed.
The costs of Inventory factoring rates range between 2% to 3.5% of the dollar value of the inventory purchased, representing a transaction costs, based on your expected / projected inventory turn rate.
This rate should be viewed through the prism of true measurement analysis.
In the above example, your rate of say 3% of the $50,000 in inventory Factor costs will be $1,500.00.
Selling the unit inventory for $100,000.00, your true measurement cost of this transaction would be $1,500 / $100,000.00 making the true cost of inventory factoring 1.5%.
Client could leverage volume purchase discounts with larger purchases, and save more on volume than the true measurement net cost here of 1.5%.
In addition, there may be a prompt payment discount to consider, of say 2% 10 / Net 30.
Client has potential to exceed true measurement costs, considering these potential volume / payment discounts.
In most cases GMF does not have a Application Fee for signing up to use our services. Certain cases may require Application Fees, should costs be required by GMFC to perform certain due diligence steps to verify your information.
Inventory Factoring is the purchase of a company’s inventory by the Factor, while the care, custody, and control, of the inventory remains with the Client, and the Factor retains its rights in the specific contractual inventory covered by the individual schedule / contract, through a direct UCC-1 filing
GMFC pays the Approved Client PO / AP directly to the Client Supplier, on behalf of the Client, GMFC is providing cash immediately to the Client Supplier, with no available line of credit to the Client.
A line of credit from a bank may be adequate in some cases but not in every case. A bank line is predicated on your credit worthiness and certain industries are even off limits by commercial banks for fear or reputation risk. Typical bank requirements to obtain a line of credit are:
Minimum of 3 to 5 years in business
Minimum of 2 to 3 years of positive cash flow sufficient to cover your loans and lines of 1.2 – 1.5 times your annual debt service
Most banks offer combined collateralized borrowing bases directly related to 50% of your net inventory & 80% of your up to 90 day aged net trade accounts receivables balances, with standard periodic reporting for each category.
Potential Personal Guarantees from all owners
Clean and strong credit scores
Positive net worth balance sheet
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