You Ask—We Answer: How can I finance purchases of goods despite long payment terms?
“How can I finance large purchases of goods when my customers have long payment terms?” Many companies are familiar with this problem: For large orders, goods must first be purchased or produced. At the same time, customers demand long payment terms of 60, 90, or even 120 days. This quickly creates a financing gap.
The Typical Liquidity Problem in Retail and Manufacturing
If goods must be paid for in advance, while payments are not received until months later, this can put a significant strain on cash flow. Traditional lines of credit quickly reach their limits, especially during periods of strong growth or when handling large individual orders.
Companies then face the challenge of financing large purchases of goods without jeopardizing their liquidity.
Purchasing Financing as a Solution
One possible solution is what is known as purchase financing. In this arrangement, a financing partner provides capital to pay for the purchase of goods. The company can deliver the goods and receives payment from the customer later.
The advantage: Financing is directly tied to the specific business and grows along with the volume of orders.
Combination with Factoring
A combination of purchase financing and factoring is often particularly effective. While the procurement of goods is financed, factoring ensures that invoices are converted into cash immediately after they are issued.
This creates a continuous financing cycle:
- Financing the Purchase of Goods
- Delivery to the Customer
- Sale of the receivable to a factoring provider
- Immediate Inflow of Liquidity
Enable growth rather than hinder it
With the right financing, companies can take on even large orders without straining their cash flow. This is a decisive competitive advantage, especially in industries with long payment terms.
GFL—Gesellschaften für Liquidität—helps companies find suitable solutions for purchase financing and factoring. Through its network of financing partners, it can develop customized solutions specifically tailored to retail and manufacturing companies.
This makes it possible to finance large purchases of goods without customers’ long payment terms becoming an obstacle to growth.
