In the meantime, the distributor must meet the on-going demand of other customers. On the other end, they are often forced to negotiate favorable payment terms of net-30 to net-90 days with their customers.ĭepending on the time it takes to receive products, collect orders and ship the products, the time lag can stretch as far as three or four months between the distributors cash outflow and its cash inflow on a particular order of goods. In many cases, the products are purchased on a cash-only basis or with very short payment terms. Small- to medium sized wholesale distributors almost always operate with a lengthy time lag between the time they pay for goods to be sold and the time they receive payment from their end-customers. The Time Lag Dilemma for Wholesale Distributors Therefore wholesale invoice factoring offers a great solution to alleviate cash shortfalls. It can certainly be a limiting factor when considering growth opportunities. That can be a tall order for fledgling wholesale distributors when they have to wait 60 or 90 days for invoice payments while meeting the current demand for deliveries. Central to being able to maintain such levels while keeping options open for growth opportunities is a manageable and predictable cash flow. It can be a very complex business to move product, requiring flexibility and fast response times while operating at the highest levels of accuracy and efficiency. Wholesale distribution is a key link in the supply chain that connects manufacturers with their end-customers.
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