what is inventory financing 
the term inventory financing refers to a short term loan or a revolving line of credit acquired by a company so it can purchase products to sell at a later date these products serve as the collateral for the loan inventory financing is useful for companies that must pay their suppliers for stock that will be warehoused before being sold to customers it is particularly critical as a way to smooth out the financial effects of seasonal fluctuations in cash flows and can help a company achieve higher sales volumes by allowing it to acquire extra inventory for use on demand 