Jennifer and Doug Reynolds, owners of USA Distribution, found themselves with a growing problem: too many new orders and not enough cash to fill them. "What a great and incredibly frightening problem to have. The constant back and forth between our suppliers and customers was overwhelming and it caught up to us as customers began to cancel orders. Our major suppliers were tired of our promises to have a check in the mail.
After our largest customer told us that they were entertaining new bids for our goods, we had to find a solution... and quickly. Our banker recommended that we talk to Gateway Commercial Finance invoice factoring company. Their team moved quickly and professionally to get us the cash we needed to fulfill our orders. We were never good at juggling, we'll stick to distribution."
The distribution industry is extremely dynamic and demands that companies be prepared to handle just about anything. One day, your apparel distribution company is considered a relatively successful regional organization, and the next day you are suddenly looked at as a national rising star. It all sounds great to the people who read about your story, but there is so much more to success than just good news print.
In the apparel distribution world, it is critical to maintain good relationships with your suppliers. Most suppliers base their pricing and availability on how much product you buy, and how reliable you are with your payments. When your growth is steady and measured, it is easier to grow your volume with an apparel manufacturer and develop a strong relationship. But when your company's growth starts to outpace your cash flow, then you develop problems.
The biggest mistake that many apparel distributors make is they try to work with their customers or suppliers to solve the problem of growing too fast. The issue is that customers want their product and manufacturers want their money. A distributor needs someone in the middle who can enhance cash flow and make sure that the funding for new orders is always available. A good apparel distribution company needs an invoice factoring company as a financial partner.
The problem for apparel distributors occurs when the orders start flowing in faster than customers can pay their bills. It is not always about past due invoices, but rather the success of the distributor catching up to it. When you are an apparel distribution company that is sitting on an increase in invoiced sales that threatens to put your company out of business, then you need to call the cash flow experts in the apparel factoring industry.
Apparel factoring turns outstanding receivables into cash and creates a reliable cash flow that you can use to pay manufacturers and deliver products to clients. An apparel distributor is constantly trying to keep both sides of their business equation happy and it is not easy. The process becomes even more difficult when the customers keep requesting credit and the cash flow is not keeping pace. With the help of apparel factoring, your distribution organization can use those new customers to lay the foundation for your continued success.
A distribution company works with thin margins and is constantly under pressure to buy more products from manufacturers and keep customers happy. A sudden rise in new customers and new orders can seem like a great thing, but all it really does is throw the company into chaos and threatens to ruin many of the relationships the company has spent years cultivating.
In order for an apparel distribution company to avoid allowing success to turn into a disaster, there needs to be a reliable cash flow and persistent source of funding that can work just as quickly as the orders come in. An invoice factoring company can offer that kind of financial service and give the distribution company the economic tools it needs to survive.