One of the challenges businesses and consumers have had during the past couple of years has to do with product distribution and logistics as manufacturers and retailers move products through the market. The shuttering of local businesses and increasing time at home due to the pandemic has resulted in more people turning to online ordering and bulk purchases. Stores and suppliers are having trouble keeping up. As shelves are stocked, consumers, with concerns about future availability continue stockpiling to some extent. Because of these continued patterns, getting ahead of demand continues to be a challenge in many sectors of industry.

If your business relies on moving inventory or materials, you’re likely working to get ahead of specific supply issues in your field. As you work to manage supply, you also have to consider insurance, customs, fees, currency exchange (in the case of international distribution), inventory depreciation, and returns for which to account. The good news is that several financial tools can help your business get ahead of demand. You can pay for, move, warehouse, and insure your goods without immediately impacting available working capital by choosing the right financial tools. This article will address some of the costs of distribution and how to manage them by working with the right lender.

The Goods

Whether you’re distributing or acquiring materials and inventory, you have to procure and protect the goods themselves. Upfront costs can be hard to cover when you need to deliver first and get paid later. Bringing inventory in the door doesn’t always mean it’ll go out again just as quickly. That’s when financing becomes a key piece of the puzzle.

To get money for materials and inventory ahead of sales, look to these solutions:

Bridge Loans

These are short-term loans that let you get cash right away. You can pay back the loan using revenue from your sales. Bridge loans are especially helpful when you already have orders to fill and know you’ll be receiving payment on schedule. They’re less useful if you have a retail business that relies on retail consumers.

Lines of Credit

A secured or unsecured inventory line of credit lets you borrow up to your credit limit as needed. You then pay monthly or quarterly to free up your balance. That balance is then available when you need to borrow again. This is a great solution if you have predictable ups and downs in sales, such as with seasonal revenue. They’re not ideal if you need long-term funding.


Once you’ve bought inventory, you need to see that it gets safely to where it needs to be. Mishaps do occur and you want to be sure to recover your costs in case of loss or damage. Just as you would use insurance to protect your home and your automobile, ensuring your inventory is important too. Many lenders bundle insurance with other services like freight charges and warehousing.


Over land and sea, shipping is a complex business made more complicated when products move from one country to another. Importers will likely need to address both terrestrial and marine travel. For companies ordering and shipping domestically, the most likely methods are truck and train.

Here are two options to get you moving:

Equipment Loans

Purchasing or leasing trucks and vessels is one way to control your shipping process. This way, you own the vehicle and don’t have to pay a separate company to do the moving for you. You’ll have more flexibility with scheduling and a direct line to the person transporting your goods. The downside is that you have to insure the vehicle and hire drivers.

Hard Money Loans

If you’re going to hire a shipping company to bring in an extra shipment or make up for increased costs, try asset-based loans. Asset-based lending, like hard money loans, let you leverage the value of the inventory to bring in cash quickly. You can also use real estate and equipment as collateral. Hard money loans work well for businesses that have bad credit. These are short-term loans that mature in a few months to a few years, so you need to plan ahead to pay back the loan in time.


To receive a delivery, you need to have a destination. Your options here are varied too. Do you want to rent or own your warehouse? You can choose to rent an entire warehouse, or space in a warehouse, especially if you’re using a fulfillment service. Real-estate loans can help you buy warehouses. Leasing a shared space will save you janitorial, insurance, labor, and utility costs.

Moving Money

Shipping and receiving goods is just half of the picture. Money needs to flow from you to your suppliers and from your clients to you. To get it done smoothly, trade financing and supply chain financing help improve cash flow and reduce risk. You’ll maintain the working capital necessary for flexibility, and you can grant clients more time to pay, easing the immediate pressure on their wallets, when you use these services.

Here’s a quick rundown of both forms of financing:

Trade Finance

This comes in the form of an intermediary bank or institution that provides letters of credit, insurance, and guarantees. Trade finance is used when payment is made ahead of delivery. This gives the buyer reassurance that they’ll get what they paid for and the seller is protected in case the customer fails to pay. It’s often used when the buyer and seller haven’t conducted business together before.

In addition, trade financing offers protections against shipments that get derailed by political instability, fluctuating exchange rates, and non-creditworthy buyers. It can come in the form of lending lines of credit, factoring, export credit, trade credit insurance, and working capital loans. Trade finance can also work as a bridge loan, covering the gap between your expenses and revenue from goods sold.

Supply Chain Financing

Supply Chain Financing (SCF) is a way to manage the capital invested in the physical supply chain. It’s an alternative to trade finance that’s more commonly used when businesses are known to each other. It works when a smaller company ships to a large retailer and frees the seller from some of the risks involved in transporting goods. SCF can also be fully automated where trade financing is a bit more traditional. It doesn’t require a bank and isn’t a loan.

SCF is sometimes called “reverse factoring” because it’s initiated by the buyer, not the seller. The interest rate for SCF is determined based on the buyer’s credit rating. When the buyer makes a purchase, the seller uploads an invoice to the financing company. The buyer approves the invoice and sends payment at maturity to the financing company instead of the seller. Once the invoice is approved, the seller can ask for payment at any time, even before the due date. The financing company sends payment to the seller, minus a fee.

This article touches on ways to manage finance in important areas like shipping and receiving, but there’s much more to learn. If you want to dig deeper into how to manage your costs when it’s time to transport goods in any direction, contact us! We have a wealth of information to share.