Industry

Wholesale and distribution funding in Canada: what funders actually read.

The deposit patterns, seasonality and timing that decide how a Canadian wholesale and distribution file is read.

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How funders read wholesale and distribution files

Distributors turn large volumes at thin margins with payment cycles that stretch from purchase to collection, which makes working capital the permanent need.

Customer payment terms against supplier payment terms
Concentration in a few large accounts
Deposit pattern across the month
Inventory turn and obsolescence

The cash-flow rhythm

Holiday and harvest cycles lift volume in some categories, and summer lifts others. Orders are often scheduled and predictable.

Where the pressure usually shows up

Suppliers want payment before customers pay
A late large account strains the month
Margins are thin, so a payment is a large share of profit

What the money usually does

Bulk inventory with supplier discounts
Warehouse racking or a delivery truck
Credit extended to new accounts
Bridging the gap between payables and receivables

Deposits are large, so a moderate request relative to monthly deposits keeps the payment comfortable, and a flexible structure suits uneven collection.

A worked example

Illustrative arithmetic

A regional food distributor depositing about $260,000 a month asks for $100,000 for a warehouse expansion and inventory. At a 1.2 factor the payback is $120,000, a cost of $20,000. Over roughly 7 months that is about $816 per business day, or close to 7% of monthly deposits.

Total payback: $100,000 × 1.2 = $120,000.
Cost: $20,000.
Payment: about $816 per business day, or 7% of monthly deposits.

Every figure on this page is illustrative arithmetic in Canadian dollars. It is not an offer, a quote or a promise of approval.

Before you apply

Provide customer-concentration detail
Show payables and receivables timing
Have supplier discount quotes and truck or racking quotes

Typical starting points

Monthly revenueTypically from around $20,000 a month in deposits for Canadian files. The exact line varies by funder and by file.

Time in businessTypically about 12 months. Newer businesses can be reviewed, but the options narrow.

Account healthLimited low-balance or negative days. Funders read the last few months of bank statements for this.

CreditScores from 500 are considered. A score of 600 or higher opens more options and better offers.

DocumentsA signed application and recent business bank statements, typically the last four months.

Existing advancesFiles with an existing advance can be reviewed, including second position.

Common questions

Is concentration a problem?

It is read as a risk. A modest request relative to deposits keeps the file comfortable.

Can I fund inventory?

Yes. Bulk-buy discounts often pay for part of the cost.

What about invoice factoring?

It is a different structure. See the comparison page for how it differs.

Keep reading

Merchant cash advance CanadaHow an advance against future card sales works Revenue-based financing CanadaRepay a fixed multiple as a share of revenue Cash-flow affordability calculatorCan the month carry the payment?IndustriesHow each trade is read by funders Funding use casesPayroll, inventory, expansion and more Underwriting situationsCredit, NSFs, time in business and more

Educational information only. It is not legal, tax or accounting advice.

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