Content Types: Funding Solutions

Inventory Financing vs. Revenue-Based Financing: A Guide

Posted on by Kaylyn Perry

In 2025, small and mid-sized businesses, particularly those in the consumer packaged goods (CPG) industry, are seeking more flexible funding options to manage inventory and cash flow. Traditional loans often come with stringent repayment terms, personal guarantees, and limitations on how funds can be used. Two emerging funding options gaining traction are Revenue-Based Financing (RBF) and Inventory Financing with Kickfurther. Let’s take a closer look at how these options compare and which might be the best fit for your business.

Revenue-Based Financing

Revenue-Based Financing provides businesses with capital in exchange for a percentage of future revenues until the agreed-upon repayment amount is met. This model is particularly appealing for CPG brands that experience seasonal fluctuations, as it allows for flexible repayment schedules that align with sales performance.

Advantages of Revenue-Based Financing

  • Flexible Payback Structure: RBF repayments are directly tied to sales performance. If a company experiences a strong revenue month, it pays back more; during slower months, it pays back less. This flexibility makes RBF a useful option for businesses with cyclical or seasonal sales patterns.
  • Upfront Capital: Businesses receive significant upfront funds that can be allocated toward large inventory purchases, marketing campaigns, or other necessary expenses, leveraging future revenue for immediate growth.
  • Non-Dilutive: Unlike venture capital or equity financing, RBF does not require business owners to give up ownership stakes in their companies.

Disadvantages of Revenue-Based Financing

  • Limited Funding: The amount of capital available is directly tied to revenue. Businesses with lower sales volumes may struggle to secure the necessary funds to support large-scale inventory needs.
  • Best for Short-Term Investments: RBF is ideal for expenses that quickly generate returns, such as inventory and marketing. It is not a suitable solution for ongoing operational expenses like staffing.
  • Costly Repayments: Since payments are taken directly from sales revenue, businesses must be prepared for consistent withdrawals. This can create a cash-flow strain, especially if revenue projections are not met.

Inventory Financing

 

Inventory financing allows businesses to leverage the resources of a financing partner to pay for inventory production. This type of financing is especially helpful for businesses that experience significant delays between paying for inventory and receiving payment from future sales.

With inventory financing, the products produced act as the collateral for the financing, which means that if the business reports an inability to repay the funding, the inventory can be sold to cover the debt. This can provide a level of security for the financing partner, which can result in more favorable terms for the business.

One of the key benefits of inventory financing is that it can be customized to address a business’s exact manufacturing, shipping, and sales timelines. Some providers even offer payment terms that align with natural cash flow cycles, meaning that no payment is required until the inventory sells. This can help to improve a business’s cash flow and reduce the risk of running out of working capital.

Inventory financing can also be helpful for businesses that want to receive volume-based discounts by placing larger orders to support all of their sales channels. This works best when done on a regular basis, such as quarterly, and can help to prevent stock-out issues that can stifle growth.

Inventory Financing with Kickfurther

For businesses in the CPG space looking for a more tailored inventory funding solution, Kickfurther presents a unique alternative. Unlike traditional financing or revenue-based, Kickfurther enables companies to secure up to 100% of their inventory costs with payment terms that align with actual sales performance.

Why Choose Kickfurther?

  • No Immediate Repayments: Businesses do not start paying back until their inventory sells, allowing them to manage cash flow more effectively.
  • Non-Dilutive Capital: Kickfurther does not require business owners to give up equity, preserving ownership and control.
  • Not Considered Debt: Since Kickfurther funding is not classified as a loan, it does not appear as debt on financial statements. This can be advantageous when seeking additional funding or negotiating valuation with investors.
  • Fast and Large-Scale Funding: Kickfurther can fund entire inventory orders quickly, helping businesses meet supplier deadlines and keep up with demand.

How Kickfurther Works

Kickfurther connects businesses with a community of buyers who fund their inventory needs. Once funded, businesses receive their inventory without taking on debt. As sales occur, businesses repay buyers, typically with an agreed-upon profit margin. This structure ensures that payments are only made as inventory is sold, reducing financial strain on the business.

Which is Best for Your Business?

Feature Revenue-Based Financing Kickfurther Inventory Financing
Repayment Structure Fixed percentage of monthly revenue Payment made only as inventory sells
Use of Funds Inventory, marketing, and growth-related expenses Strictly for inventory purchases
Dilution Non-dilutive Non-dilutive
Debt Classification Considered a liability on financial statements Not classified as debt
Speed of Funding Relatively quick Very fast, aligns with supplier needs
Risk Level Moderate, requires strong sales to avoid cash flow issues Lower risk, since repayments align with sales

Final Thoughts: Which Option is Right for You?

For CPG brands and product-based businesses, maintaining sufficient inventory levels is critical for growth. Kickfurther’s ability to provide up to 100% of inventory funding without immediate repayments can be a game-changer for a growing brand. However, brands that need capital for multiple operational needs beyond inventory may find Revenue-Based Financing to be a more versatile solution.

As brands navigate 2025, the demand for flexible, growth-oriented financing solutions will continue to rise. Whether you choose Revenue-Based Financing or Kickfurther, the key is selecting the funding option that best aligns with your sales cycle, growth strategy, and cash flow management needs.

Understanding Consignment Model Funding and Why It’s Better for Scaling Your CPG Brand

Posted on by Kaylyn Perry

Funding the growth of CPG brands can be a significant challenge. Many brands face hurdles when it comes to financing inventory, often finding that traditional funding options, such as bank loans or lines of credit, don’t serve their unique needs. Enter consignment model funding—a solution that addresses the specific pain points of fast-growing CPG brands and helps them scale.

In this blog, we’ll explore what consignment model funding is, how it can help CPG brands scale more efficiently, and why it’s better than traditional financing methods, particularly for CPG brands.

Traditional Financing: Challenges for Scaling CPG Brands

Many growing businesses turn to traditional financing methods, such as loans or equity investments, to fund inventory and scale operations. While these methods have their place, they often fall short of serving the dynamic needs of fast-growing companies, especially in the CPG sector.

Here are some common pain points associated with traditional financing:

  1. Fixed Repayments: Traditional loans come with fixed repayment schedules, which can create strain if sales cycles take longer than expected. Even if your products haven’t sold, you’re required to make repayments, which can disrupt cash flow and hinder operations.
  2. Equity Dilution: Companies may seek out venture capital or equity investors, but this comes at the cost of giving away ownership stakes in the business. As a result, founders lose some control and may face long-term consequences on how the company is run.
  3. Credit Liability: Traditional financing can lead to increased liabilities on your balance sheet. This impacts your company’s creditworthiness, making it harder to secure future financing if needed.
  4. Debt Accumulation: Relying on loans often leads to a cycle of debt accumulation. As businesses grow, they might need to take on additional loans to fund increasing inventory needs, compounding their financial burdens.
  5. Strained Cash Flow: Fixed repayments, high-interest rates, and other fees associated with traditional loans can create a constant drain on working capital, limiting your ability to reinvest in growth initiatives.

What Is Consignment Model Funding?

Kickfurther’s Consignment model funding is an innovative approach where Kickfurther purchases inventory on behalf of a CPG brand and consigns it back to them. This model differs from traditional loans or equity financing because the inventory is technically owned by the funder until it is sold by the company. Once the inventory is sold, the business makes payments back to Kickfurther.

Here’s how the consignment funding process typically works:

  1. A Growth Opportunity Emerges: Your company identifies a need for additional inventory to scale operations or fulfill demand but lacks the working capital to make the purchase upfront.
  2. Submit Your Requirements: You provide details such as the total funding required, production timelines, and expected sales dates to a consignment funding partner like Kickfurther.
  3. Kickfurther Purchases the Inventory: They cover up to 100% of your cost of goods sold (COGS), purchasing the necessary inventory from your suppliers on your behalf.
  4. Inventory Shipped to Your Warehouse: The inventory is sent directly to your distribution channels or warehouse, allowing you to sell through your established sales networks.
  5. Repay as You Sell: As the inventory starts selling, a portion of the proceeds is paid back to the funder, and you keep the rest as profit.

You only pay back the consignment funding after your inventory sells, so there’s no immediate pressure on your cash flow. Additionally, there’s no debt accumulation on your balance sheet because the consignment model is not classified as a loan.

Achieve Growth Without Financial Strain

The consignment funding model offers several advantages over traditional financing options, particularly when it comes to scaling efficiently.

1. Off-Balance-Sheet Financing

One of the most significant benefits of consignment model funding is that it does not add debt to your company’s balance sheet. Traditional loans appear as liabilities, which can weigh down your financial statements and make your business less attractive to future lenders or investors.

Since consignment financing is not a loan, it isn’t recorded as debt, meaning your company can grow its inventory without negatively impacting its balance sheet.

2. No Immediate Repayments

With traditional financing, you’re required to make regular payments whether your inventory has sold or not. In contrast, consignment model funding aligns repayment with actual sales. This means you only start repaying the funder once you’ve sold your inventory, freeing up cash flow during critical growth periods.

This flexibility reduces financial strain and allows you to focus on selling your products rather than scrambling to meet fixed repayment schedules.

3. Non-Dilutive

Equity financing can be tempting, but it comes with the downside of giving up partial ownership of your company. In contrast, consignment model funding is non-dilutive. This means you retain full ownership and control of your business, allowing you to scale without compromising future growth opportunities.

4. 100% of COGS Covered

Traditional financing often covers a portion of your capital needs, leaving you to bridge the gap with personal funds or other resources. With consignment model funding, you can cover up to 100% of your cost of goods sold. This ensures you have the full amount needed to purchase your inventory, reducing the need for additional financing.

5. Customizable and Flexible Terms

Consignment model funding offers a level of flexibility that traditional loans or equity financing can’t match. For instance, you can customize payment terms to suit your specific sales cycles, allowing you to scale at your own pace. This flexibility is particularly valuable for seasonal businesses or those with fluctuating sales volumes.

6. Growth Without Financial Strain

One of the greatest advantages of consignment funding is that it allows businesses to grow without experiencing the financial strain typically associated with scaling. By removing the burden of upfront inventory costs and offering flexible payment options, companies can focus on growth initiatives like marketing, hiring, and expanding distribution networks.

Is Consignment Model Funding Right for You?

If your CPG brand is experiencing rapid growth and struggling with inventory financing, consignment model funding could be the perfect solution. It’s particularly beneficial for companies in the consumer product goods (CPG) industry, where inventory needs often outpace available working capital.

Here are a few key indicators that consignment funding might be right for you:

  • Your business needs capital for inventory but doesn’t want to take on debt.
  • You’re looking to scale but don’t want to give up equity.
  • You need a financing solution that aligns with your sales cycles.
  • You want to improve cash flow without being burdened by fixed repayments.

Conclusion: Why Choose Consignment Model Funding?

The consignment model is a flexible, non-dilutive, and off-balance-sheet solution that aligns with the growth needs of CPG companies. By removing the financial strain of upfront inventory purchases, it offers businesses a way to scale efficiently without taking on debt or giving up equity.

Kickfurther’s unique approach to consignment model funding helps companies thrive by covering up to 100% of their cost of goods sold, ensuring that they have the resources needed to meet growing demand while maintaining control of their financial future.