Sporting goods business financing: Exploring asset-based lending solutions
Although much of the sporting goods sold in North America are imported from overseas, there has been an increase in reshoring for many categories. Working capital needs differ greatly between domestic production and importing to get from design to collecting accounts receivable post-sale in the cash conversion cycle.
Often seasonal, companies in this industry can experience severe high and lows in liquidity, needing more flexibility than a conventional credit line can provide.
Compounding this, the pandemic has brought a surge in sales and demand to many categories in the industry. With vacations curbed and indoor activities banned or reduced, consumers turned to outdoor equipment causing high demand for bicycles, watercraft and camping gear, among others. This created a high percentage of back-orders and a need for financing to increase inventories or boost production.
How your sporting business can get cash for working capital needs
Credit sales can result in a drain on cash when customers delay in making payments. Although usual terms can be a low as net 30, the practice of giving dating to retail customers can cause real hardship to suppliers who need to pay expenses and start ordering for next season.
The natures of asset based lending and factoring lend well to this industry especially if the sales are seasonal. For these lending structures, access to financing is based on the value of the accounts receivable, inventory and equipment, not the balance sheet. So when assets are at their highest—in shipping season and while waiting for collections—often more financing is available than from a conventional line of credit.
For manufacturers, extra cash is necessary to import raw materials and support the production process. For importers with purchase orders on hand, you may qualify for a purchase order financing facility.
Access business financing with Accord Financial
If you have been searching for the right business financing company to assist in funding your sporting business operations, Accord Financial provides a wide range of products and services. Being in the forefront of the lending business in Canada and the US, our highly experienced team has helped many sporting businesses navigate through cash crunches.
You can readily access different asset-based lending solutions through Accord Financial. If your sporting business carries a healthy balance of accounts receivable, Accord would evaluate your assets and can give you cash based on eligible assets. Factoring can also help your sporting business increase production levels leading to growth.