A grocery store ordering staples by the pallet or an auto parts counter stocking filters by the case can ask Orchardstone Lenders, which passes the request to funding partners; each partner decides.
Inventory financing pays for stock before it sells, and the stock can secure it. Three invented cases on this page: a grocery store's rice and masa flour, an auto parts store's case order of filters and wiper blades, and a clothing store's work pants and flannel shirts.
At a glance
- What it pays for
Stock bought from a supplier for resale
- What can secure it
The stock itself, if the partner agrees
- Who decides
The funding partner that reviews the request
Stock as Security: Inventory Financing at a Hanford, CA Grocery Store Ordering Rice and Masa Flour by the Pallet
A grocery store that buys rice, masa flour and dried staples by the pallet pays the distributor up front and sells the bags over the following weeks. Inventory financing covers that gap: a funding partner pays for the stock, may take a security interest in it, and the store makes payments as the shelves turn over.
Illustration only, invented figures: a Hanford, CA grocery store finances $31,615 of pallet stock at a 13.79% annual rate over 10 months. Ten invented payments of $3,364.74 come to $33,647.40, so the grocer pays $2,032.40 in interest for having the pallets early.
Kings County, CA had 61 grocery and convenience stores with paid employees in 2023, and 29 of them had fewer than five employees (County Business Patterns, NAICS 4451). A pallet order can tie up cash that a small store also needs for payroll.
In ZIP 93230, 24 grocery and convenience store establishments were counted in the same 2023 data (ZIP Code Business Patterns, NAICS 4451).
Filters and Wiper Blades by the Case: A Kings County, CA Auto Parts Store Paying Down Stock as It Sells
An auto parts store that buys oil filters, cabin filters and wiper blades by the case may get a lower unit price but pays the distributor weeks before the last box leaves the shelf. Inventory financing spreads that bill over the months the cases take to sell, with the stock itself as the likely security.
Illustration only, invented figures: an auto parts store in Kings County, CA finances a $13,745 case order of oil filters, cabin filters and wiper blades at a 14.36% annual rate over 6 months.
- In this invented example, the funding partner pays the distributor $13,745 for the cases.
- The store pays an invented $2,387.73 a month for 6 months, whichever week the cases sell.
- The six invented payments total $14,326.38, so the invented interest is $581.38.
- If the cases sell out by month four, the last two invented payments come from the store's other sales.
County Business Patterns counted 29 automotive parts, accessories, and tire stores in Kings County, CA in 2023 (NAICS 4413). How a partner prices a parts stock order, and whether it finances parts stock at all, is set in its own offer.
From Supplier Invoice to Sold Shelf: The Order of Events in a Hanford, CA Grocery's Stock Financing
- The store gets a supplier quote or invoice for the stock it plans to order.
- The owner phones Orchardstone Lenders, or fills in the request form, naming the pallet order's total.
- The grocer's details go to funding partners, and the one reviewing them may want bank statements, the distributor's invoice and a recent count of what is on the shelves.
- Any offer names its own amount, rate, term and collateral.
- If the store accepts, the partner may pay the supplier directly or send the funds to the store.
- The store sells the stock and makes payments on the schedule in the offer.
Some partners may want to see how the stock sells before they set a term. A grocery item that turns in a few weeks fits a shorter term than a slower line of goods. A post on grocery and clothing store stock follows a size-run clothing order and a weekly dry-goods reorder.
The Stock Count a Hanford, CA Clothing Store Keeps, and the Questions a Partner May Ask About It
A clothing store in Hanford, CA asking about inventory financing may be asked about the stock it already holds as well as the order it wants to pay for. Orchardstone Lenders passes requests to funding partners; it is one way to reach them, not the provider itself.
- How old the stock on hand is, counted by the month it arrived.
- How the count is kept: a point-of-sale system, a spreadsheet or a count by hand.
- What share of last quarter's sales went out at full price.
- Which supplier terms, such as 30 or 60 days to pay, already apply to the order.
A store that keeps a clean stock count can answer each of these from its own records, and a partner may ask for the count itself as well.
Work Pants and Flannel Shirts: An Inventory Financing Example for a Kings County, CA Clothing Store
Illustration only, invented figures: a clothing store in Kings County, CA restocks work pants and flannel shirts for $23,785 at a 15.63% annual rate over 8 months. The store sends $3,150.02 a month in this invented example; eight of those make $25,200.16, of which $1,415.16 is interest.
Eight months is a short term on purpose in this invented example: the stock should sell well before the last payment, so the store is not still paying for shirts that left the rack long ago.
ZIP 93230 had 30 clothing and clothing accessories stores with paid employees in 2023 (ZIP Code Business Patterns, NAICS 448).
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