Invoice Factoring for Distributors: Cash Flow Relief

Invoice factoring helps distributors turn unpaid invoices into reliable cash flow so they can keep growing without added debt.

How Invoice Factoring Helped a Distribution Business Solve Its Cash Flow Crunch

How Invoice Factoring Works

Invoice factoring turns unpaid invoices into immediate cash. Instead of waiting months for customers to pay, a business sells its invoices to a factoring company for 85% to 90% of their value upfront.

When customers pay, the factoring company sends the rest, minus a small fee. It’s not a loan - it’s the sale of an asset you’ve already earned. That means no new debt, no drawn-out bank approvals, and dilution of your equity.

For distributors, this can be a lifeline. It keeps working capital flowing to cover payroll, suppliers, shipping, or other expenses, while also freeing you to take on new opportunities and larger accounts.

Factoring Example

A mid-sized distribution company was riding high—but success was straining cash flow.

Customers had 60-day payment terms, while suppliers demanded payment in 30 days or less. That gap between payables and receivables became a choke point. Payroll loomed, inventory needed restocking, and shipping bills piled up.

Eventually, the company had to turn down new orders—not because demand slowed, but because cash did. Big accounts looked impressive on paper, but the money wasn’t arriving fast enough to keep operations moving.

The Turning Point

This particular distributor had more than $500,000 tied up in unpaid invoices. The money was technically theirs—but practically useless. Bills don’t wait, and neither do suppliers.

They partnered with Morewood Funding to unlock that trapped capital. Within days, they received 90% of the invoice value upfront. That cash covered supplier payments, payroll, and new inventory for upcoming shipments.

Supplier relationships improved, operations stabilized, and the anxiety of waiting for payments vanished.

“Within 48 hours, we had cash in hand and could finally breathe again,” said the company’s CFO.

Why Invoice Factoring Works for Distributors

Distributors often live in that no-man’s-land between tight margins and long payment cycles. You front the costs of inventory, logistics, and labor—then wait months to get paid. Factoring bridges that gap and turns receivables into real working capital.

Here’s why invoice factoring for distributors makes sense:

• Cash when you need it: Convert invoices into working capital in days, not months.

• Stronger supplier leverage: Pay vendors early and negotiate better terms.

• Funding that grows with you: The more you invoice, the more capital becomes available.

• Smart financing, no debt, no equity: You’re selling an asset, not borrowing money.

Factoring gives distributors the breathing room to focus on growth—not collections.

Partner With Morewood Funding

If delayed payments are slowing your growth, invoice factoring can help you move faster. With over 20 years of experience helping distributors stay liquid, Morewood Funding connects businesses with trusted lenders who understand the ins and outs of distribution cash flow solutions and tailor financing that fits your operations.

Call 917-561-7074, email howard@morewoodfunding.com, or visit morewoodfunding.com to start turning your receivables into real working capital today.