Liquor Store Inventory Financing: 3 Tips To Overcome Cash Flow Crunches

A major holiday weekend is looming on the calendar, and your liquor store’s shelves are running dry. 

You know you need to order more inventory to take advantage of the holiday rush, but your bank account is looking just as empty. 

Without a plan, this scenario can spiral into a cash flow crisis — one that’s almost impossible to escape. 

That’s why we’ve created this quick guide to share essential liquor store financing strategies. Learn why businesses like yours often face cash flow challenges, and discover how securing the right kind of credit, leveraging instant payouts, and improving your inventory management approach can help. 

Liquor Store Inventory Financing Challenges

First, let’s talk about what causes liquor store cash flow disasters. You’ve probably encountered frustrating issues like: 

• High minimum orders: Beverage distributors often require substantial minimum order quantities or values, which means that you can’t just restock a few of your bestsellers. These minimums make purchasing new inventory prohibitively expensive.  

• Seasonal fluctuations: Since liquor sales ebb and flow with the seasons, you have to invest in new inventory and prepare for peak sales when you’re short on cash. If you can’t find the money during these slow periods, you’ll miss out on big sales.

• Negative cash flow loop: When you can’t afford new inventory, it creates a ripple effect. You run out of your bestsellers, you lose sales, and your inventory budget shrinks even further. 

These factors make stocking your shelves difficult — but not impossible. Let’s look at three ways to protect your bottom line, break free from the negative cash flow cycle, and make financing your liquor store’s inventory a breeze.

1. Take a Smart Approach to Credit

When cash is tight and it’s time to stock up on beer for summer barbecue season, credit becomes your lifeline. 

But many liquor store owners make the mistake of haphazardly applying for credit during a cash flow crisis. Instead, we recommend being proactive, evaluating your options, and securing the right credit option before it becomes an emergency. 

Let’s take a look at three types of liquor store inventory financing:

Business Credit Cards

Business credit cards are one of the most popular options among small business owners for their simplicity, flexibility, and speed. 

Since you probably already have one, you don’t have to wait for your bank’s approval before placing an inventory order. 

However, relying on a credit card for your inventory financing has a few downsides — including lower credit limits and high interest rates if you can’t pay them off right away.

Lines of Credit

A business line of credit is the next step up from a credit card. 

Lines of credit usually come with larger borrowing limits, lower interest rates, and more flexible repayment terms — making them a better option for larger seasonal inventory orders. 

Keep in mind that most banks require more documentation and higher credit scores for this type of credit, and you’ll have to borrow directly from your lender rather than simply swiping a card when you want to access these funds. 

Short-Term Loans

Short-term loans give you access to the largest lump sums, making them a go-to option for liquor store owners purchasing initial inventory. 

Instead of only accessing the funds you need for inventory financing, you can spend the entire loan amount on stocking your liquor store. 

However, you’re required to pay interest on the full amount, regardless of whether you spend all the cash. 

More Credit Tips

Let’s look at a few best practices for securing credit for your liquor store: 

• Establish a relationship with a lender: Establishing credit history with a lender helps you get the best terms possible on future loans, so choose one bank for your liquor store financing needs. 

• Visit a local branch: An experienced lender — especially one in the liquor store financing industry — will work with you to find the best option for your business. 

• Plan ahead: Opening a business credit card or line of credit before you actually need it can help you negotiate better terms and make more informed decisions. 

Above all, know your options and be strategic about how to finance inventory — and avoid making impulsive decisions when money gets tight. 

2. Leverage Instant Payouts

Ordering inventory just one day late can dent your bottom line. If you’re falling behind on restocking your bestsellers because you’re waiting for weekend sales to hit your bank account, you’re at risk of slipping into a negative cash flow loop. 

To avoid this scenario, consider switching to a payment processing provider that offers instant payouts. 

The two to three days you usually have to wait for revenue to hit your bank account can lead to stockouts and slowdowns — but instant payouts let you access these funds immediately. They also prevent weekend and holiday-related delays. 

While instant payouts won’t necessarily help you overcome large order minimums, they can give you peace of mind, free up cash for other bills, and help you restock sooner. 

Related Read: Liquor POS Credit Card Processing: 3 Best Providers 

3. Understand Your Inventory Turnover

While credit and instant payouts can help you solve cash flow problems in the short term, your main goal should be preventing them in the first place. 

Inventory management mistakes are one of the most common causes of stagnant cash flow. Here’s how: 

• You order inventory based on gut feelings, stocking your shelves with quantities that you think will match customer demand. 
• Your sales trends take an unexpected turn — some bottles sell much faster than others. 
• Now, you have valuable cash tied up in bottles that your customers don’t want, and you can’t afford to restock your bestsellers. 

Fortunately, the right liquor store inventory management software can prevent this chain of events. This powerful tool analyzes your sales trends, identifies your bestsellers and underperformers, and helps you accurately forecast demand. 

For example, your software might reveal that premium whiskeys take 120 days to turn while domestic beer turns every 15 days. Ordering these products at the same time in the same amounts might seem proactive, but it will lead to storage and cash flow problems. 

Instead, rely on the data to shape your inventory purchasing decisions. This strategic approach will help you avoid stockouts and deadstock while keeping your store’s bank account afloat. 

Bonus Resource: The Guide to Liquor Store Inventory Management 

Simplify Liquor Store Inventory Financing With Bottle POS

Liquor store inventory financing is one of the toughest challenges you’ll face as a liquor store owner — but you can overcome it with flexible payment options and the right tools. 

Looking for more ways to manage your store like a pro and boost profitability? We’ve got you covered! 

Our comprehensive guide to owning a liquor store includes crucial inventory management, customer experience, pricing, and financing strategies to help you run a more successful business. Start reading it for free.