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Stock financing for SME entrepreneurs

Buying in stock can have a big impact on your working capital. Especially when it comes to stock and purchases that also depend on the season. It may then be necessary to take out a loan, so that there is more room to invest and purchase the necessary stock.

Buy inventory, short or long finance?

With every business loan you take out, it is important to think carefully about the goal. If the goal has a short term, it is better to also choose a short or flexible financing. For example, you can finance machines best with long-term financing, but that is not the case with stocks. For stock you can choose a short-term credit, or a flexible form of financing. An example of this is, for example, a current account with a bank. You then have a credit limit, which can even be seasonal if you, as a company, have strong differences in purchases per month. Another solution is financing your purchase invoices. This way you can keep your stock up to date and the financier pays your purchase invoices. You can then pay this back later or in installments. The different forms of financing also bring differences in interest and costs.

Financing method highlighted: supplier credit

Although you can always request a loan from a bank or other financier for the purchase of stock, there is also a form that comes from the chain itself: the supplier credit. This form often works the other way around; instead of interest and repayment, you pay spread and you get a discount from the supplier if you pay back more quickly. This is by far the most common way of stock financing and perhaps not even something that you, as an entrepreneur, see as financing. But if you agree to pay 'within 90 days', then of course that is just a form of credit. Always try to talk to your supplier first. To finance stock in this way is the cheapest and simplest way. If there is a need for a larger loan, it is advisable to look at the various financiers who can provide a solution. Compare the costs between financiers and financing forms, because there can be strong differences.