Craft Spirits Factoring 101: How It Benefits Your Business In the ever-evolving world of craft spirits, there’s one challenge that consistently rears its head: cash flow. Managing it effectively is…
In the ever-evolving world of craft spirits, there’s one challenge that consistently rears its head: cash flow. Managing it effectively is the key to growth and survival, but that’s often easier said than done. As you wait for your distributors, retailers, or bars to pay their invoices, you may find yourself cash-strapped and unable to fund the production of your next batch. Fortunately, there’s a solution that can turn your potential financial hurdles into stepping stones for growth: craft spirits factoring.
Craft Spirits factoring is a financial solution in which brands sell their accounts receivable (i.e., invoices) to a factoring company, or “factor,” at a discount. In return, they receive an upfront percentage of the invoice amount, usually between 70% and 90%, helping them meet immediate operational costs. When the end customer pays the invoice, the factor remits the remaining balance to the business, minus a factoring fee.
So, why should your craft spirits brand consider craft spirits factoring as a part of its financial strategy? Here’s why.
1. Improved Cash Flow: Factoring provides immediate access to cash tied up in outstanding invoices. It removes the standard 30- to 90-day wait for customer payment, helping you manage cash flow more effectively.
2. Production Continuity: For craft spirits brands, maintaining a steady production cycle is crucial. Without sufficient cash flow, production could stall, impacting your brand’s reputation and customer relationships. Factoring can help you maintain continuity in production and meet your supply chain demands.
3. Greater Growth Opportunities: By unlocking cash flow and supporting production, factoring allows you to accept larger orders, take on new customers, and expand your business.
4. Credit Risk Management: Factoring companies usually provide credit checks on your customers, helping you avoid extending credit to high-risk customers.
Finding the right factoring company for your craft spirits brand requires careful consideration. Look for a factor that understands your industry and its unique challenges. At TAG, we specialize in providing tailored financial solutions for craft spirits brands, offering a deeper understanding of your business needs and market dynamics.
1. Industry Expertise: Choose a factoring company with a proven track record in the craft spirits industry. Their experience and knowledge can provide valuable insights to help your business grow.
2. Transparent Pricing: Ensure your chosen craft spirits factoring partner offers clear, straightforward pricing with no hidden fees.
3. Customized Solutions: Look for a factoring company that offers flexible and customized financing solutions to match your business’s specific needs.
4. Excellent Customer Service: Customer service is a key aspect to consider. Your factoring company should be a financial partner who is always available to answer your questions and address your concerns.
Craft spirits factoring is an effective and flexible financial solution that can help your craft spirits brand manage cash flow challenges, support growth, and navigate the complexities of the spirits industry. By choosing a factoring partner like TAG, who understands your industry and provides tailored factoring solutions, you can turn your accounts receivable into a strategic tool for business success. So, why wait for your customers to pay their invoices when you can factor them? It’s time to take control of your cash flow and steer your craft spirits business towards growth and prosperity.
The Acceleration Group (TAG) is a pioneering financier in the craft spirits sector. Specializing in factoring, barrel financing, and other bespoke financial solutions, TAG empowers distillers to scale and thrive. With deep industry insights and a passion for innovation, TAG is redefining how craft spirits brands achieve success. Apply Now to see if you qualify for TAG’s financing solutions.