We Deliver The FUNDS
Financing & Factoring Distributors
0.69% to 1.59%
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Distribution companies come to us for funding because they:
- What is invoice factoring for distributors?
- What types of distributors and wholesalers qualify for factoring?
- Is factoring better than a bank loan for a wholesale business?
- What are the main issues distributors face? (and how factoring solves them)
- What are the benefits of factoring for distributors and wholesalers?
- What documents are required for invoice factoring?
- How does invoice factoring work for distributors?
- What are the benefits of factoring with 1st Commercial Credit?
- What is inventory financing, and how can it help distributors and resellers?
- What are the factoring costs, rates, and fees for distributors and wholesalers?
- FAQs
What is invoice factoring for distributors?
Invoice factoring for distributors is a financial service that allows distributors to improve cash flow by selling their accounts receivable (invoices) to a third-party company, known as a factoring company or factor. This enables distributors to get immediate access to funds instead of waiting for their customers to pay their invoices, which often takes 30 to 90 days or more.
1st Commercial Credit offers 4 major financial solutions that distributors need.
- Invoice Factoring allows to advance funds for delivered merchandise and monitors the credit of the incoming payment stream.
- Purchase Order Financing allows additional working capital for recurring purchase orders. This includes light assembly or repackaging onsite.
- Trade Payable Credit to pay suppliers early with extended payment terms. Provides great value for suppliers and eliminates the need for letters of credit.
- Supply Chain Financing: Distributors are often faced with the need to add more to their capital to satisfy their increasing purchase orders. 1st Commercial Credit offers very simple cash flow solutions that can be set up in a matter of days.
Rates from 0.69% to 1.59%
What types of distributors and wholesalers qualify for factoring?
1st Commercial Credit works with small and medium-sized businesses in a wide range of industries.
Our commercial finance team will structure a unique and quick funding solution based on your industry-specific needs. We provide cash flow lending solutions and work with start-ups, companies in the growth phase, companies undergoing mergers and acquisitions, and those experiencing financial struggles.
Distribution facilities that extend credit terms to their customers often have a large amount of cash tied up in unpaid invoices. Our funding program allows you to unlock that capital quickly by turning your receivables into immediate working capital.
With improved cash flow, you can confidently offer credit to new and larger customers, take advantage of early-payment discounts from your suppliers, purchase larger quantities at reduced costs, and pursue growth opportunities that may have previously been out of reach.
Is factoring better than a bank loan for a wholesale business?
Unlike traditional forms of financing, distributor invoice factoring does not involve a lengthy application and approval process. Setting up an invoice factoring account is a simple process. After completing the application, the account is generally approved within 3 to 5 business days.
Although credit scores are not required, the factoring company will still review the business’ invoice process and financial management. It will also run credit background checks of the business’ customers. The only factors affecting eligibility include having any outstanding tax liens or other financial impediments.
Many small distributors have a difficult time accessing traditional sources of financing like bank loans. In many cases, banks won’t lend to smaller distributors experiencing uneven cash flow. On the positive side, the last thing a business with irregular cash flow needs is additional debt obligations. For these reasons, an alternative form of financing, such as invoice factoring, is quickly becoming the preferred option for distributors and wholesalers.
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What are the main issues distributors face? (and how factoring solves them)
For distribution companies, managing cash flow can be a significant challenge, especially when dealing with long payment cycles.
Accounts receivable factoring is a valuable financial tool for distributors looking to enhance their cash flow, support business growth, and take advantage of new opportunities. By leveraging this solution, distributors can keep their operations running smoothly and stay competitive in a challenging marketplace.
How to cover supplier costs while waiting to get paid by retailers?
Distributors often need to pay suppliers within 10 to 30 days, while their customers may take 60 to 90 days to pay. This gap can create serious cash flow pressure and limit purchasing power.
With invoice factoring, you can access most of the value of your outstanding invoices within 24 hours. This allows you to pay suppliers on time, maintain strong relationships, and even benefit from early-payment discounts, without draining your cash reserves.
How to fund large purchase orders without a loan?
Large orders often require upfront payment for inventory, shipping, or production, but traditional bank loans can be slow, restrictive, or difficult to qualify for.
Factoring gives distributors immediate access to working capital based on existing receivables, not credit score or collateral. This means you can confidently accept and fulfill large purchase orders, increase your order volume, and grow your business, without taking on long-term debt.
How can I pay employees and suppliers on time with slow-paying customers?
Slow-paying customers can make it difficult to meet payroll and cover daily operating expenses, even when your business is profitable on paper.
By factoring your invoices, you receive consistent, predictable cash flow as soon as you invoice your customers. This ensures you can pay your employees and suppliers on time, avoid late fees or operational disruptions, and keep your distribution business running smoothly regardless of your customers’ payment habits.
What are the benefits of factoring for distributors and wholesalers?
1st Commercial Credit can set up your account within 3 to 5 working days for receivable factoring. There are plenty of reasons why 1st Commercial Credit stands out from all other financial institutions. Our offers put your interest above all else.
- We offer higher credit limits than banks.
- Decisions are made the same day.
- Fast funding under $350,000.
- We do not require facility fees or ongoing audits.
- No up-front fees to set up.
Bring In Money Without Taking On New Debt
Wholesale distribution is a crucial link in the supply chain that connects manufacturers with customers. The distribution business is a very complex business that involves the movement of products, which requires flexibility and fast response times to remain operating at the highest levels in the industry. To keep such high levels while continuing to grow, a reliable and healthy cash flow is needed. Companies can access this cash through distributor financing.
Having to wait for a customer to pay an invoice sold on payment terms (30, 60, or 90 days) can certainly be a limiting factor when considering growth opportunities. Invoice factoring offers an ideal financial solution to alleviate these cash shortages. In addition, 1st Commercial Credit can also provide inventory financing for distributors in the country.
1st Commercial Credit’s factoring services will provide you with:
- Quick Funding: Available cash when your company needs it.
- Cash Flow: Access to a healthy and reliable source of cash
- Support: The team at 1st Commercial Credit will support your business and provide high-quality customer service.
Your distribution and wholesale business will also be receiving the following benefits:
- A financial safety net
- Business opportunities
- Confidentiality (Non-notification option available)
What are the benefits of factoring for seasonal distributors?
Seasonal distributors often experience large swings in revenue throughout the year. During peak seasons, demand can surge, requiring significant cash to purchase inventory, hire staff, and cover increased operating costs. During slower months, revenue may drop while expenses remain steady. This imbalance makes cash flow management especially challenging.
Factoring can help seasonal distributors with:
- Improved cash flow during peak seasons to support higher inventory and labor needs
- Stability during slow periods, ensuring bills, rent, and payroll can still be paid
- Ability to take on larger or last-minute orders without worrying about cash shortages
- No long-term debt, since factoring is based on invoices, not loans
More flexibility to scale operations up or down as demand changes
Rates from 0.69 to 1.59%
What documents are required for invoice factoring?
Getting started with invoice factoring is simple and requires far less paperwork than a traditional loan. Here are 7 documents you need for invoice factoring eligibility:
- Factoring application
- Aging report of your accounts receivable (A/R aging list)
- Copies of invoices you’d like to factor
- Proof of delivery or service (such as signed delivery receipts, BOLs, or timesheets)
- Customer credit information
- Business formation documents (Articles of Incorporation, LLC agreement, etc.)
- Voided business check for ACH setup
How does invoice factoring work for distributors?
- The company applies by filling out a 2-page form online.
- The application is assessed, and approval is issued within 3 to 5 days.
- If approved, a company submits a copy of an invoice to the 1stCC.
- 1stCC reviews the invoice and verifies the value provided.
- Within 24 hours or less, 1stCC will deposit a cash advance of the agreed percentage of the invoice value into the business’s account.
- 1stCC holds the balance on reserve until the transaction is complete.
- When 1stCC receives full invoice payment, it pays the balance reserve to the business minus a small factoring fee of 0.69% to 1.59% to complete the transaction.
What are the benefits of factoring with 1st Commercial Credit?
Not all factoring companies understand the unique nature of distribution and wholesale receivables, but with our 20+ years in business, we do. Managing invoices in this industry often involves large order volumes, multiple suppliers, tight margins, and long payment terms from retailers and commercial customers. These moving parts require a factoring partner with experience in handling complex receivable cycles and fast-paced inventory turnover.
A good factoring company for distributors and wholesalers is one that truly understands the cash flow challenges of the industry, including long payment cycles, high upfront inventory costs, seasonal sales shifts, and rapid growth demands.
1st Commercial Credit will offer fast approvals, simple onboarding, competitive advance rates, and experience working with retailers, manufacturers, and large commercial buyers that commonly operate on 30 to 90+ day payment terms.
Here’s how we will support your business:
- More cash on hand for everyday operating expenses
- The ability to meet payroll and tax obligations on time
- Support to fulfill larger and more profitable orders
- Improved purchasing power for bulk and discounted inventory
- The ability to pay suppliers faster and strengthen relationships
- Greater flexibility to take on new customers and expand product lines
What is inventory financing, and how can it help distributors and resellers?
Inventory financing acts as a short-term loan or line of credit for businesses, allowing distributors and resellers to purchase inventory upfront for future sales.
The purchased inventory will be used as collateral. Inventory financing is commonly used to build up a company’s product inventory for peak seasons with high demands, take advantage of purchase discounts, and meet growing sales demand.
The financing company will want to be assured that you can make consistent loan payments from profits on your ongoing inventory turnover through high sales volumes. This form of financing benefits all aspects of the business, including packing, project design, factory production, shipping, and delivery of inventory to its destination.
Some manufacturers rely heavily on inventory finance to ensure their capability to produce the necessary product volumes to satisfy their clients. As a result, buyers will often favor manufacturers that use a reliable source of financing for production and inventory.
Inventory financing is often used by wholesalers, retailers, and manufacturers to build inventory. Interest rates for borrowing money are lower than those for unsecured debt because inventory is used as collateral. Some companies enjoy the benefits of paying their supplier right away or having a longer manufacturing process.
What are the factoring costs, rates, and fees for distributors and wholesalers?
When considering factoring services for your distribution company, understanding the costs involved is crucial. At 1st Commercial Credit, our rates are designed to be competitive and transparent, ranging from 0.69% to 1.59%.
These fees reflect the flexibility and speed of cash flow solutions we provide, ensuring that you can access the funds you need quickly without hidden costs. Whether you need immediate capital to cover payroll, manage supplier payments, or seize growth opportunities, our factoring rates offer a cost-effective way to enhance your business's financial stability.
FAQ About Distributors and Factoring
No, factoring does not affect your credit score. Since it's not a loan, it doesn’t involve a credit check on your business. The factoring company assesses your customers’ creditworthiness, not yours.
Absolutely. Factoring gives you the financial flexibility to accept larger orders or customers by providing immediate cash flow. This allows you to confidently offer extended payment terms without impacting your operations.
Most distributors and wholesalers who sell goods on credit terms to other businesses (B2B) can qualify for factoring. The main qualification is the creditworthiness of your customers, making this option accessible even if your own business has a limited credit history or is in a growth phase.
Yes, your customers will be informed that their payments are being directed to the factoring company. We ensure the process is handled professionally, so your customer relationships are maintained. In many cases, the transition is seamless, and customers see it as a routine part of business.
