A real distribution company serves many different functions. A distributor is a company that purchases products from manufacturers and then sells them to retailers or other kinds of organizations that deal with end users. For example, a soda pop distributor will sell bottled products to supermarkets and taverns. Both retail business reach a different kind of audience, which is why the distributor chooses these kinds of customers.
Toy manufacturers utilize distributors who have strong relationships with online and offline retailers to make sure that their entire target audience is covered. Along with the standard service of acting as go-between for manufacturers and end user sales organizations, distributors also have several other services that they offer.
A distributor will often drop ship products for end user sales organizations to end users. When the distributor drop ships a product and puts the end user sales organization's information on the paperwork, then that is called blind drop shipping. It is extremely common in all industries, and is especially popular in catalog and online sales.
Distributors will often act as the liaison between manufacturers and larger retail clients for marketing funds designations. The distributors will identify the end user sales companies that offer the best exposure for each manufacturer, and then the distributor will take marketing funds from the manufacturer and then assign them to the end user sales organization.
Most larger distributors offer product assembly services for their end user sales clients. This service is prevalent in the auto part, computer technology and promotional product industries. For many distributors, product assembly is a huge portion of their annual income.
When a distribution organization has so many obligations to a multitude of manufacturers and customers, it becomes important for that distributor to have a healthy cash flow situation. Manufacturers offer credit terms to distributors and distributors offer credit terms to their clients. In this equation, the distributor has a substantially larger responsibility for tracking a large volume of clients. That much accounts receivables work can get expensive, but it is necessary for maintaining a distributor's business.
Cash flow is king in distribution, because good cash flow means that a distributor can keep its manufacturers and its employees happy. If a distributor cannot pay its bills to a manufacturer, then the manufacturer has other distributors to choose from to work with. It is a difficult industry for the companies that cannot control their cash flow.
A distributor with a healthy network of end user sales clients also has an unhealthy collection of past due invoices. It is impossible to maintain a strong and reliable cash flow when customers pay their invoices in unpredictable fashions. In order to remain a successful distributor, an organization has to find a way to improve its cash flow without relying on long-term loans with high interest rates.
Invoice lending is a financial program offered by professional corporate lenders who know how important cash flow really is. An invoice lending organization will fund your distribution company in full for each invoice. The only deduction is a small lending fee for each invoice, but that is a minimal price to pay when you are getting your invoices paid on time, or even early.
The invoice lending organization also takes over all of your accounts receivables and collections responsibilities for those invoices as well. That means that your distribution organization can focus on offering the best possible services and not have to worry about ongoing receivables activities.
A distributor looking into invoice lending may decide that it would make his customers uneasy. When you choose a professional and experienced invoice lending company, the process is seamless to your customers. Your customers get correspondence in your company's name and the bill paying process is not altered. Your customers will be dealing with a professional organization and your company is enjoying the benefits of smooth cash flow.
A distributor is a company with many different responsibilities. In order to maintain its status as a reliable business partner, a distributor needs to have a strong cash flow. When a distribution organization decides to start working with a professional invoice lending company, the distributor can stop worrying about all of its receivables activities and start putting its reliable cash flow to good business use.