Published: 04/15/2026
Last updated: 04/15/2026
Most product businesses don't lack financing options. They lack a clear way to compare them. Revenue-based financing, factoring, inventory financing, invoice discounting, bank credit, equity – how do they actually hold up?
This is a side-by-side comparison of the six most common working capital tools available to product businesses at scale – what each one solves, what it costs, how fast you can access it, and where it breaks down.
💡 Key takeaways
No single financing tool covers the whole cash gap – most product businesses at scale use two
Inventory financing and invoice financing solve different parts of the same problem: paying out vs. getting paid back
Factoring and invoice discounting are not the same thing – and the difference matters for your customer relationships
Revenue-based financing has real use cases but its cost is often higher than it appears
Bank credit is the cheapest option when it's accessible – but for growing product brands, it rarely is
Equity is the most expensive tool for recurring working capital needs, almost without exception
The six financing options – a quick orientation
Before the comparison, a one-line summary of each – including the most common terminology in the market.
Inventory financing pays your supplier on your behalf so you can place production orders without draining your own cash. Also called purchase order finance, PO finance, or trade finance for product businesses. You repay once goods are sold and customers have paid. Treyd offers inventory financing built specifically for product businesses – no fixed facility fees, funding within 24 hours, no lengthy bank process.
Invoice financing (invoice discounting) advances 80–90% of invoices you've already issued but haven't been paid for yet. You retain full control of your sales ledger and customer relationships. Treyd also offers invoice financing – a simple way to advance your customer invoices and get paid within 24 hours, without giving up control of your receivables.
Factoring is a form of invoice financing and asset-based lending where the factoring company takes over your receivables ledger and chases your customers for payment on your behalf. Providers include Bibby Financial Services, Aldermore, and Skipton Business Finance.
Revenue-based financing advances a lump sum against your future revenue, repaid as a fixed percentage of monthly sales. Providers like Wayflyer, Clearco, and Uncapped offer variations of this model – often marketed as growth capital or ecommerce funding rather than revenue-based financing, but the repayment mechanic is the same.
Bank loans and revolving credit are the most familiar form of business financing – term loans for specific needs, or revolving credit lines that flex with your drawdown requirements. HSBC, Barclays, Lloyds, and specialist lenders like Shawbrook offer working capital facilities, though most require audited accounts and collateral.
Equity means selling a share of your business to investors – angel, venture capital, or growth equity – in exchange for capital. The right tool for strategic bets. Rarely the right tool for recurring working capital.
A note on cost transparency
Financing costs are presented differently across product types – APR, factor rates, percentage of invoice value, flat fees. To compare fairly, always convert to an effective annual cost and apply it to your actual cycle length. A 2% flat fee on a 60-day inventory cycle is roughly 12 % annually – comparable to many revolving credit facilities, but substantially cheaper than most revenue-based financing when the factor rate is modelled across a full year. The number that matters isn't the headline rate. It's what that financing costs relative to the margin you generate by deploying the capital.
The most common combinations at scale
Most product businesses end up using more than one tool – and the pairings that work tend to follow a clear logic.
Inventory financing + invoice financing is the most natural combination for product brands at scale. Inventory financing covers the outbound cycle – paying suppliers so production can happen. Invoice financing covers the inbound cycle – accelerating cash from customers sitting on 60-day terms. Together, they compress the cash conversion cycle from both ends. Treyd offers both within a single platform, removing the friction of managing two separate facilities.
Inventory financing + bank revolving credit works well for more established brands. The bank facility handles predictable, lower-urgency working capital where cost of capital matters most. Inventory financing fills the gaps the bank can't reach – fast-turnaround purchase orders, seasonal spikes, or new supplier relationships.
Revenue-based financing + inventory financing is worth flagging as a combination that sounds logical but can create margin pressure. Revenue-based financing repays as a percentage of monthly revenue – meaning in your high-inventory, high-outflow months, you're simultaneously funding production and making repayments on the revenue facility. Model it carefully before committing.
Factoring rarely pairs cleanly with other tools because it typically requires full-ledger assignment. Once you're factoring, you can't independently invoice-finance specific customers. If flexibility matters, selective invoice discounting is usually the better-structured choice.
How to choose: match the tool to where your cash is stuck
Cash is stuck at the supplier stage. You need to place an order but don't have the liquidity to fund it without constraining the rest of the business. Inventory financing – also called purchase order finance or trade finance – is the direct answer. It's built for exactly this.
Cash is stuck in unpaid invoices. You've shipped goods, raised invoices, and you're waiting. Invoice financing or factoring unlocks that cash. Choose selective invoice discounting if you want to retain control of your customer relationships; factoring if you'd rather outsource collections entirely.
Cash needs are ongoing and variable. You need a flexible facility to draw on across multiple cycles. A revolving credit line is the right structure – ideally with a specialist SME finance lender rather than a high-street bank if you're still in a growth phase. Most bank working capital facilities are secured; truly unsecured business loans carry higher rates and stricter revenue requirements.
You're funding a genuine strategic bet. A new market, meaningful team expansion, a product category that changes your trajectory. That's equity territory. Just don't use it to solve a recurring cash gap that a working capital facility could handle for a fraction of the long-term cost.
Summary
No single financing tool covers the whole cash gap for a product business. Inventory financing and invoice financing together address the two sides of that gap most directly – and for most product businesses at scale, that combination does the most work for the lowest total cost. Bank credit is cheaper on paper but inaccessible to many growing brands. Revenue-based financing is fast but expensive when modelled properly. Factoring trades cost efficiency for operational simplicity. Equity is appropriate for strategic bets – not for structural, recurring working capital needs.
About Treyd
Treyd is working capital built for product businesses. We help fast-growing brands, wholesalers, and distributors close the gap between paying suppliers and getting paid by customers – so cash flow stops being the thing that slows you down.
Buy first, pay suppliers later. Advance your customer invoices. No collateral, no lengthy bank process – just a simple, human experience built around how product businesses actually work.
Over 1,500 brands trust Treyd to fund their growth. See how at treyd.io/customers →
💜 Grow faster. Keep control. Bet bigger.
