Common questions that we frequently receive
What does inventory financing mean?
In inventory financing, your inventory serves as collateral for the loan. In this process, LABEST evaluates the inventory in advance on behalf of the financier. Based on this evaluation, your individual credit line can be determined.
Can all types of articles be used as collateral?
This is a classic case of “it depends.” In general, fungible items (those that can be determined by number, measure, or weight and can be easily exchanged) are particularly suitable for inventory financing, especially if there is an established market for them. This is evident, for example, in the fact that the items are offered by different providers on various marketplaces. In addition, the items should not be perishable (such as food with expiration dates) or short-lived (such as various fashion items).
However, raw materials and (semi-)finished products from manufacturing companies can also be suitable, especially within the context of a fixed purchase agreement.
If you are unsure whether your products are suitable as collateral for a loan, please feel free to contact us for an initial assessment (contact) or submit your financing request through labest.finance.
How does the repayment work?
There are various options available for the repayment of your inventory financing, which are tailored to your needs and the specificities of your company.
If you manufacture or deliver goods on an order/project basis, repayment can be made through continuous amortization, aligned with the payments from your customer.
If you require ongoing inventory financing, a revolving credit facility is also possible. Within the credit line granted based on the inventory evaluation, you can access funds according to your current needs. As your inventory increases, your credit limit also grows, and as your inventory decreases, you repay the difference accordingly.
What are the benefits of inventory financing?
The charm of inventory financing lies in the ability to convert the capital tied up in your inventory into liquidity, which you can then use for the growth of your company or for optimizing your financing structure.
As a result, inventory financing is generally more cost-effective than fully utilizing a supplier credit or allows you to take advantage of volume benefits when making purchases. In addition to improving your margin, inventory financing also offers high flexibility and dynamism. You can adjust your utilization according to your needs: as your inventory grows, for example, during the seasonal business, the credit security and the available financing amount increase accordingly. Or vice versa, when your inventory is reduced. As a result, interest is only charged on the amount you actually need, reducing the overall cost of financing.
What exactly does LABEST do?
LABEST sees itself as a partner to borrowers and lenders and is a service provider specializing in inventory financing. In short, LABEST makes inventory financeable.
This includes, among other things:
- Pre-evaluation of inventory for financeability, including market valuation
- Inventory monitoring during the loan period
- Support in the event of default for the liquidation process
What does it mean to make inventory financeable?
For many lenders, inventory is generally not considered as an option for collateral. This is because they cannot track or understand what happens within the “black box” of the inventory warehouse. Their information usually comes from retrospective reports, often simply in the form of an Excel list. This is too late for the necessary response if the collateral no longer meets the requirements.
LABEST utilizes its monitoring software to address this information gap and bring continuous transparency to the inventory warehouse. Through a simple integration with your inventory management system, we import the relevant credit information on a regular basis. Enriched with current market prices, we display this information on our monitoring interface, which you and your financier have access to. The proximity to the inventory created in this way allows for acceptance as collateral for financing.
Does LABEST provide warehouse financing itself?
No. LABEST focuses entirely on making your inventory financeable.
For the financing of your inventory, we work with various partners specializing in inventory finance.
Do you already have a good point of contact, for example, through your house bank? We are also happy to assist you as a service partner, independently, in order to create the necessary transparency for your bank as well. Please feel free to contact us regarding this matter.