Your distribution company team works hard, delivering products, stocking shelves, and getting materials where they need to be. But even when your orders move fast, payments often don’t.
Retailers, manufacturers, hospitals, foodservice companies, and industrial buyers commonly take 30, 60, or even over 90 days to pay invoices. Meanwhile, your cash is tied up in inventory, transportation, warehousing, and staffing long before your customers release payment.
Invoice factoring helps distributors turn slow receivables into fast cash flow, so operations never stall.
A Real-World Example: Keeping Inventory Moving
BrightLine Distribution, a regional supplier of HVAC and electrical products, faced long payment cycles from commercial contractors and large wholesalers. Over $500,000 of their invoices were consistently tied up in Net-60 terms.
Meanwhile:
- Suppliers wanted deposits
- Freight costs kept rising
- Warehouses needed maintenance
- The inventory needed to be replenished before the busy season
After being matched through Funding Explorer, BrightLine began receiving 90% of the invoice value within 24 hours.
This allowed them to:
- Restock high-demand items quickly
- Take on larger recurring purchase orders
- Pay suppliers early for better pricing
- Reduce reliance on expensive credit lines
“We stopped worrying about who was paying when. Factoring let us buy more inventory and grow faster than we thought possible.” – Operations Manager, BrightLine Distribution
Understanding Invoice Factoring for Distribution Companies
Invoice factoring is a financing service that helps distributors convert unpaid invoices into immediate working capital.
Instead of waiting weeks or months for customer payments, you sell your outstanding invoices to a factoring company. The factor advances most of the invoice value right away (typically up to 95% within 24–48 hours), and you get the remaining balance once the customer pays.
This service helps you:
- Restock inventory
- Cover freight and delivery costs
- Pay suppliers faster
- Take on larger purchase orders
- Avoid cash flow bottlenecks
All without waiting on slow customer AP cycles.
Factoring Solutions for Every Type of Distributor
This solution supports product-based businesses such as:
Wholesale Distributors
- Food and beverage
- Industrial supplies
- Building materials
- Electrical & HVAC supplies
- Janitorial & sanitation products
Product & Goods Distributors
- Consumer packaged goods (CPG)
- Retail products
- Medical & PPE supplies
- Automotive parts
- Office & facility supplies
Logistics-Integrated Distributors
- Drop shippers
- Importers/exporters
- Domestic distribution centers
Specialty & Niche Distributors
- Safety equipment
- Tools & hardware
- Agricultural supplies
- Packaging materials
If you issue invoices with Net-30 to Net-90 terms, factoring helps smooth the gaps between product delivery and final payment.
The Financial Strain Behind a Distributor’s Daily Operations
Distributors sit in the middle of the supply chain, expected to move fast, deliver flawlessly, and keep shelves stocked. But financially, you’re often the one waiting.
Before you ever see a payment, you’ve already paid for:
- Inventory purchases and restocking
- Warehousing and storage costs
- Delivery trucks, drivers, and fuel
- Packaging, labeling, and fulfillment
- Chargebacks, deductions, and vendor compliance fees
- Staff, insurance, technology, and facility overhead
At the same time, your clients, large retail chains, producers, medical facilities, food suppliers, and industrial purchasers, typically adhere to their own payment timelines, which rarely align with yours.
Even strong customers sometimes delay payments due to PO mismatches, routing guide requirements, multi-level approvals, or simple AP backlog.
Important Cash Flow Statistics for Distributors
- Most distributors operate on Net-30 to Net-90 terms, but actual payment terms often exceed 60–90 days.
- Up to 40% of distributor invoices are paid late, based on U.S. supply chain finance data.
- Inventory absorbs 30–60% of a distributor’s available cash, long before revenue comes in.
How Distributors Get Paid Faster With Factoring
Here’s how factoring for distributors works:
1. You deliver the product, maybe a $28,000 pallet shipment or a $65,000 industrial supply order.
2. You send the invoice to your customer.
3. Instead of waiting weeks for payment, you submit the invoice to your factoring company.
4. Within 24–48 hours, you get up to 95% of its value.
5. When the customer pays, you receive the remaining balance minus a small factoring fee.
With no debt and no waiting, you can operate without any cash flow concerns. We empower you to restock and grow your business at full speed. Experience the freedom to keep moving forward without any slowdowns!
Why Our Factoring Expertise Works for Distribution Companies
Finding the right factoring company on your own is time-consuming, and many funders don’t understand the unique billing, deductions, and PO structures in distribution. Funding Explorer removes that hassle.
You avoid dozens of calls, slow responses, and lenders who don’t fund your type of invoices. We match you directly with factoring partners who specialize in product-based businesses.
You’ll get:
- Fast approvals so you can stabilize cash flow quickly
- Up to 95% advances to help restock and fulfill large orders
- Programs built for distributors, including recurring and volume-based invoices
- Clear, simple pricing with no long-term commitments
- Funding based on your customers’ credit background, not your own
- A free expert matching service so you avoid lenders who can’t support your needs
You get the right funding partner, without wasting time or effort.
Common Questions Distributors Ask About Factoring
Can small distributors qualify?
Yes. If your customers are creditworthy, you can qualify regardless of size or credit score.
Do factors accept recurring, weekly, or monthly invoices?
Absolutely. Many funders specialize in distributors with ongoing orders or scheduled shipments.
Can I factor invoices with deductions or chargebacks?
If the final approved amount is clear, most factors will fund them.
How fast can I get funding?
Usually, within 24 hours after setup, many invoices are funded the same day.
Do I have to factor every invoice?
No, you stay in control. Factor only the invoices you want to sell.
Power Your Distribution Business With Predictable Cash Flow
Your customers rely on you to deliver on time. Your business relies on getting paid on time.
Factoring gives you the working capital to restock inventory, cover expenses, and grow without waiting for slow AP departments.
Find your best distributor factoring partner through Funding Explorer today.
Analia Miguel is an MBA and former CPA with 20+ years in business finance and marketing, including 14 years in alternative business finance. She helps business owners understand their funding options and choose cash flow solutions that truly fit their needs.
Last Updated: November 28th, 2025
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