A call or the request form reaches Wrenway Funding, which hands the request to funding partners for their decision.
Inventory financing advances part of the cost of stock, takes a lien on that stock and is paid down as the goods sell. Interest runs on what is still owed. Purchase order financing is a cousin for goods that are already sold to a customer but not yet made or delivered.
At a glance
- Automotive parts, accessories and tire stores, Lawrence County, TN
17 employer establishments (CBP 2023, NAICS 4413)
- What secures it
The financed stock, sometimes more
- Who sets the advance share
The funding partner
Inventory financing in Lawrence County, TN, from the supplier invoice to the last unit sold
The order of events is what sets inventory financing apart from a plain loan. The money is tied to particular goods from the first step, and the deal winds down as those goods leave the shelf.
- The business gets a quote or invoice from its supplier for the stock it wants.
- A funding partner may review the business and the goods: what they are, what they cost and how they sell.
- If the partner makes an offer, it advances a share of the cost, sometimes straight to the supplier, and the business covers the rest.
- The partner may file a lien on the financed stock, which stays in place until the balance is cleared.
- As units sell, the business pays the balance down, and interest is charged on what is still outstanding.
The share advanced, the pricing and the paydown schedule all come from the partner. A partner may also ask for regular stock reports or an inventory count while the balance is open.
Inventory financing companies and the questions a Lawrence County, TN store can put to each one
Lawrence County, TN had 17 automotive parts, accessories and tire stores with paid employees in 2023 (County Business Patterns, NAICS 4413), and a parts counter is a good place to test an offer, because its shelves hold thousands of small items that sell at very different speeds. The same handful of questions separates one inventory financing company from another:
- What share of the invoice is advanced, and is the rest due from the store at the start?
- Is the cost interest on the outstanding balance, a flat fee per month, or both?
- Does the lien cover only the financed goods, or everything the business owns?
- Are there stock reports, counts or field visits, and do they carry fees?
- What happens to stock still unsold when the term ends?
- Can the partner pay the supplier directly?
Writing the answers next to each other, in dollars over the same period, makes two offers comparable. Wrenway Funding passes requests to partners and does not finance inventory itself.
An inventory financing example in numbers: a Lawrence County, TN auto parts store's battery and tire order
Illustration only, invented figures: a parts store orders $34,550 of batteries and tires. A partner advances 80% of the invoice, $27,640, at an annual rate of 12.15%, and the store puts in the other $6,910 itself. Interest is simple interest on a 365-day year, charged on the balance for each 30-day period, and the store makes a paydown at the end of each period as the order sells.
| Period ends | Balance owed | Interest for 30 days | Paydown | Balance after |
|---|---|---|---|---|
| Day 30 | $27,640 | $276.02 | $8,200 | $19,440 |
| Day 60 | $19,440 | $194.13 | $7,900 | $11,540 |
| Day 90 | $11,540 | $115.24 | $6,450 | $5,090 |
| Day 120 | $5,090 | $50.83 | $5,090 | $0 |
In this invented example, interest across the four periods comes to $636.22. Because the balance shrinks as tires and batteries sell, the interest charge falls every month. Had the stock moved more slowly, the balance would have stayed higher for longer, and the interest would have grown with it.
Inventory financing, defined by what secures it: the stock on a Lawrenceburg, TN store's shelves
What sets inventory financing apart is its collateral: the goods waiting on the shelves to be sold back the loan or line. A partner may value the stock below what the business paid for it, since goods sold off under pressure may not fetch full price, and it may lend less against items that spoil, go out of style or sit for a long time.
Two neighbors on this site cover nearby ground. The business line of credit can pay for stock too, but it need not be tied to particular goods. A working capital loan pays a lump sum toward running costs of every kind. Inventory financing is the narrow tool: one order, one pledge, paid down as that order sells.
Of the 568 employer establishments with a ZIP 38464 address in 2023, 120 were in retail trade (ZIP Code Business Patterns).
A purchase order financing example: a Lawrence County, TN plant's supplier paid before its buyer pays
Purchase order financing helps when the goods are already sold but not yet made or delivered. The funding source pays the supplier of the materials, the business fills the order, and the customer's payment clears the balance. A fabricated metal shop is one example; Lawrence County, TN counted 12 fabricated metal product manufacturing establishments with paid employees in 2023 (CBP, NAICS 332).
Illustration only, invented figures: a shop wins a $38,250 order for brackets and needs $23,400 of steel first. A funding source pays the steel supplier and charges a fee of 3.5% of that payment for each 30 days it is out. The customer pays 60 days after the order is placed, so the fee is $1,638.00. The shop's margin on the order before its own labor and overhead is $14,850; after the fee, $13,212.00 remains.
The question to ask is whether the order still makes sense after that fee and the shop's other costs. If the customer pays late, the fee keeps running, so the payment terms on the order matter as much as the price. A supplier invoice paid early with borrowed money is worked through on the Lawrenceburg, TN page. A building supply store's closing stock count is priced on the industries page.
Two blog posts carry stock costs further: a furniture store's full-load order and a station store moved to every-other-week deliveries.
By Wrenway Funding ยท Updated
