Factoring Helps Firearms Companies Boost Cash Flow, Meet Customer Demands

Factoring, Finance

If your company is involved in the manufacturing and distribution of firearms or ammunition, you understand the pressure to meet growing customer demands.

The past two years have seen record sales for the firearm industry in the United States. According to FBI data, there were more than 23 million background checks for gun purchases in 2015. Last year, the number of background checks increased to 27 million. Manufacturers like Smith & Wesson and Sturm Ruger are seeing record sales, as are major firearm retailers like Walmart, Cabela’s and Dick’s Sporting Goods.

While business may be booming for makers, suppliers and distributors in the firearm industry, keeping up with surging demand from American consumers can be very challenging. Increased production costs can quickly deplete your company’s available cash and limit your ability to grow.

Have Your Considered Factoring?

Many firearms manufacturers are learning that factoring receivables is the most effective way to immediately increase their cash flow.

Instead of waiting 30 to 60 days to receive payment from Walmart or another retail customer, your company can factor the invoice and receive a cash advance in less than 24 hours. This funding allows you to pay vendors more quickly, increase production, speed up your supply chain and add new business. Unlike a traditional bank loan, factoring grows as your company’s receivables grow and is also debt-free.

How Factoring Works in Five Steps:

1. You deliver your product to a customer.

2. You send the invoice to a factoring company, also known as a “factor.” The factor sends the invoice to your customer.

3. The factor advances your company 80% or more of the invoice value.

4. Your customer pays the factor the full value of the invoice. The factor pays you the reserve balance, minus a fee.

The Benefits of Factoring

In addition to same-day funding of your invoices, here are some other ways factoring can benefit your firearms business.

  • Most factors provide free back-office support, including managing collections from your customers. This gives you more time and resources to focus on growing your company.
  • Factoring is based on the quality of your customers’ credit, not your own credit or business history.
  • Factoring can be customized and managed so that it provides necessary capital when your company needs it.
  • Factoring is not a loan, so you do not incur debt when you factor.
  • Factoring is scalable, meaning the amount of funding can grow as your receivables grow.

More About Factoring

To learn more about how your firearms company can use factoring to meet today’s market demands, read this informative article with more details about how factoring works.

If you have any questions, feel free to call RTS Financial at (877) 510-7339.

Sources: TheHill.com, RTS Financial