Overview

Let's face it: growing a goods business is hard, and requires a lot of capital. From placing the initial inventory order, to sitting around waiting for customer payments, and having the necessary resources to fill a PO, goods based sellers require cash on hand. Luckily, there are a lot of options for up and coming and established sellers to access the capital they need to grow. What's more, using financing helps you grow much faster than you would have otherwise.

Keep reading to explore the different types of financing offered by DayZero

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1. Invoice Financing (Accounts Receivable Financing)

What: Invoicing financing is a financing option where a business sells its accounts receivable to a third party and receives cash upfront for its outstanding invoices.

Who: Invoicing financing works best for sellers who are selling in part through the wholesale and are issuing invoices to their customers.

When: Invoicing financing is accessed once you deliver goods and issue an invoice to a customer. Simply select "get paid on day zero" when you send your invoice, and receive the invoice value in your bank account today. No more waiting around 30 days to get your hard earned cash.

Why We Love It:

• Invoice financing allows you as a seller to extend longer net terms to your customer (i.e., 60 or 90 days), all while getting your cash upfront. You can attract new and more customers by extending longer terms, and without compromising your cash position
• Invoice financing is not debt, unlike many other financing options. It does not show up on your balance sheet and there are no repayments. Instead, you pay a small fee to access the cash you have already earned.
• Invoice financing is perfect for up and coming sellers. Since invoice financing is not considered debt, there is no underwrite to your business. As such, even the smallest sellers can qualify for invoice financing.

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2. Supplier Financing (Accounts Payable Financing, Buy Now & Pay Later)

What: Supplier financing is a financing option where a third party pays your supplier and extends you credit. You then repay the third party, typically 30-90 days later. Supplier financing acts the same way as a credit card for your business

Who: Supplier financing works best for sellers who have invoices coming in from their suppliers that need payment

When: Supplier financing is accessed once you receive an invoice from your supplier. Simply select "pay with DayZero" when you pay the invoice, and save your cash until another time.

Why We Love It:

• Supplier financing allows you as a seller to accept shorter terms from your vendors without penalty. You can buy from more suppliers, without worrying about their payment terms
• Supplier financing works especially well when your supplier does not accept credit card payments. DayZero will pay your supplier and extend you credit instead. Repay whenever you have cash on hand

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3. Merchant Cash Advances (MCAs)

What: Merchant cash advances (MCAs) are a form of financing where a seller receives a lump sum in exchange for a percentage of its daily credit card sales, plus a fee. MCA providers typically connect directly to your Shopify or Amazon store to sweep a percentage of your sales as a form of repayment

Who: MCAs work best for e-commerce businesses

When: MCAs can be set up at any time

Why We Love It:

• MCAs typically allow sellers to access larger pools of capital than they would in Invoice Financing and Vendor Financing
• The cash received from an MCA can be used for any purpose
• MCAs are great for sellers with limited operating or credit history
• Since repayment is automatic based on your sales, you'll never have to worry about missing a payment

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4. Lines of Credit

What: A line of credit provides a predetermined credit limit that sellers can draw from as needed. Interest is only paid on the amount borrowed, making it a cost-effective solution for short-term financial needs. Lines of credit are suitable for managing seasonality, unexpected expenses, or seizing growth opportunities.

Who: Lines of credit are available to both online and wholesale sellers. Credit limits are typically determined based on the size of your business and your historical cash flow

When: Lines of credit can be set up at any time

Why We Love It:

• Lines of credit are the most flexible forms of financing. They can be set up at any time, and used for any purpose. Plus, lines of credit typically have flexible repayment options, meaning you can repay them as quickly as you'd like or take longer

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5. Purchase Order (PO) Financing

What: Purchase order financing is a form of financing incurred in conjunction with receiving a PO. Typically, a seller will receive a PO and then present it to a third party, in order to receive capital with which to fulfill the PO

Who: Purchase order financing is available for wholesale sellers who receive chunky POs from their customers

When: PO financing is obtained after you've received, but before you have started to fulfill a PO

Why We Love It:

• Unlike invoice financing, which is only available after you've delivered goods, PO financing is typically made available before you've started production. Thus, you can utilize your PO financing to buy supplies, manufacture inventory and pay the shipping expenses needed to fulfill your order
• Repayment aligns with your deliveries. One of the reasons that PO financing is so great is that you only have to repay the money once you get paid for your order.

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Choosing the Right Financing Option

There are numerous factors to consider when choosing the right financing option for your business.

First, consider whether you are selling primarily wholesale or primarily online. For wholesale sellers, Invoice Financing and PO Financing and great options. In contrast, online sellers can access MCAs.

Second, consider how long you have been in business. New businesses tend to qualify for Invoice Financing, PO Financing and MCAs. More established sellers may benefit from better rates when using Vendor Financing as well as Lines of Credit.

Third, consider what you need the money for. If you need cash to fulfill a PO, PO financing may provide the best rate. If your bills are coming due soon, Vendor Financing may be the way to go. If you're attempting to meet your payroll, a Line of Credit may be the best option for you.

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The DayZero Difference

At DayZero, we're committed to providing fast, flexible, one-click financing to sellers. The data within our platform allows us to circumvent lengthy applications and provide you a financing offer in just a few clicks. We grow when you grow, and we're committed to helping you obtain the best form of financing for your business. Contact us to learn more about your options today.

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