How are retail deductions and chargebacks handled?
Deductions, allowances, spoilage credits, and promotional chargebacks are normal in this industry and are built into the advance rate and reserve structure rather than treated as disqualifying. Clean historical reporting on deduction rates materially helps diligence.
Can we finance a production run before we ship?
Yes, through PO financing rather than factoring. With a confirmed order from a creditworthy buyer, capital can be advanced against ingredient, packaging, and co-packing costs before an invoice exists, then transition to a factoring line once the product ships.
Our business is highly seasonal. Does capacity flex?
Receivables-based facilities expand and contract with billing volume, which suits seasonal production better than a fixed-limit loan. Peak season capacity should be discussed up front so the facility is sized for your heaviest months.
We are launching into a new retailer. Can financing support slotting and launch costs?
Sometimes, depending on structure. Slotting fees and launch costs are not receivables, so they are not directly financeable, but freeing up cash tied in existing receivables is often how companies fund a launch. PO financing may also apply to the production behind it.
Can inventory be included?
Under an asset-based structure, yes. ABL facilities can include inventory alongside receivables in the borrowing base, which is typically relevant at $5M and above.
