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My Top Seven Reasons Why Distribution Companies Need Non-Traditional Funding



The distribution industry, responsible for getting products from manufacturers to consumers, is a central pillar of our economy. Like many industries, however, it can face challenges, especially regarding cash flow and procuring materials. While conventional bank loans and financing methods have their merits, non-traditional funding is becoming a key player in aiding distribution companies. Here's why.

1. Quick Access to Cash

Traditional bank loans might take weeks or even months before they're approved. In the fast-paced world of distribution, where demand can surge overnight, this isn't always practical. Non-traditional funding sources, such as online lenders or peer-to-peer platforms, often offer a much quicker turnaround. This rapid access to funds means distributors can react promptly to market changes, capitalize on new opportunities, or mitigate sudden challenges.

2. Easing Cashflow Issues

Distribution companies frequently face a gap between the time they pay their suppliers and when they receive payment from their customers. This time lag can strain cash reserves, making it challenging to meet operational expenses. Non-traditional funding, especially instruments like invoice factoring, provides immediate cash against outstanding invoices. This way, companies can smoothly run operations without waiting for customers to settle their bills.

3. Flexible Terms

One of the advantages of non-traditional funding is its flexibility. Unlike rigid bank terms, many alternative lenders offer more adaptable repayment schedules or amounts based on a company's revenue. This adaptability ensures that in months where business might be slower, the repayment won't weigh heavily on the company's shoulders.

4. No Collaterals Needed

Traditional loans often require some form of collateral, an asset that can be seized if the loan isn't repaid. For many distribution businesses, especially newer or smaller ones, this might be a significant hurdle. Non-traditional funding often works differently. Unsecured business loans, crowdfunding, or angel investments might not demand any collateral, making it easier for companies to obtain funding.

5. Investing in New Materials and Technology

Distribution is evolving. With advances in technology, there's a constant need to upgrade systems, invest in new tools, or purchase innovative materials to stay competitive. Non-traditional funding allows distribution companies to invest in these advancements promptly. With the right technology or materials, a distribution company can improve efficiency, reduce costs, and enhance service delivery, positioning them favorably in the market.

6. Catering to Unique Business Models

Not every distribution company operates the same way. Some might have unique business models or serve niche markets, making them less appealing to conventional banks. Non-traditional funders, being more varied themselves, are often more open to understanding and supporting such unique business propositions.

7. SEO Benefit: Enhanced Online Presence

While this might sound unconventional, SEO (Search Engine Optimization) has its place in this discussion. Distribution companies who engage with online lenders or crowdfunding platforms inadvertently increase their online presence. Backlinks from these platforms, press releases, or simply being part of an online funding campaign can increase a company's digital visibility, driving more traffic and potential business.

Attack the Rapidly Changing Business Landscape

The world of finance is not what it used to be. As the distribution sector grapples with the challenges of a rapidly changing business landscape, non-traditional funding sources offer timely, flexible, and efficient solutions. Whether it's to ease cash flow issues or to invest in the materials and technologies of the future, non-traditional funding is fast becoming the preferred choice for forward-thinking distribution companies.

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