Merchant Funding Payback Estimator for Wholesale Distributors
Wholesale distributors often need cash for inventory long before net-30 and net-60 invoices get paid. Enter your card volume, not total revenue, to see what a card-based advance might cost and how long it would take to repay on a five-day week.
Your estimate
Estimates are based on published industry averages and are not a quote. Actual rates depend on card mix, ticket size, industry, and underwriting.
A payments specialist can walk through your funding options and what an actual application would look at. This estimate is not an offer of credit or an approval decision.
Wholesale distributors: enter card sales only, not total revenue
Many distributors collect most of their receivables by ACH, check, or wire, with cards covering only part of the book. A percentage holdback is taken from card settlements, so the estimator only works from what actually settles through your card processor. If you enter total revenue, the funding range, daily holdback, and payback period will all come out wrong.
Your card volume probably comes from a few channels: keyed orders taken by phone, payment links on emailed invoices, a B2B ordering portal, and card-present sales at a will-call counter. Most of it is card-not-present. A good share may be on commercial, corporate, or purchasing cards. Add up every channel that settles into the same merchant account.
Distributor tickets are large and uneven. One $18,000 restocking order paid on a purchasing card can double a slow week. Use the average of your last three to six months of card deposits, not your best month.
If a funder offers a fixed daily ACH debit from your bank account instead of a percentage of card sales, the structure is different. A fixed debit does not shrink when card sales slow down. The estimator models a percentage holdback, so ask which type you are being quoted.
Worked example: a hypothetical wholesale distributor
These numbers are made up for illustration. A janitorial supply distributor is open 5 days a week and has been in business 30 months. It runs $120,000 a month in card sales and wants $100,000 to stock up before a large customer's contract starts. Holdback is 8% and the factor rate is 1.25.
Open days per month = 21.67, so daily card sales are about $5,538. At 24 or more months, the estimated range is $120,000 to $180,000, so the full $100,000 is used. Daily holdback is about $443, which works out to $8 of every $100 in card sales. Total payback is $125,000, so the cost of capital is $25,000. Payback takes 283 open days, about 13.1 months or 56.6 weeks, at about $9,600 a month.
For comparison, a hypothetical 12% APR term loan over 14 months would cost about $7,690 a month, roughly $355 per open day, with about $7,662 in total interest. That is about $17,338 less than the advance. If card sales ran 20% below average, the holdback would drop to about $354 a day and payback would stretch to 353 open days, about 16.3 months. The dollar cost stays at $25,000.
Estimates are based on published industry averages and are not a quote. Actual rates depend on card mix, ticket size, industry, and underwriting.
Seasonality, returns, and net terms: what moves the math for wholesale distributors
Distributors usually borrow before the busy season to build inventory, then repay during it. If your card volume peaks in one quarter, a percentage holdback will repay faster in the peak and slower afterward. The gated slow-sales scenario shows how far payback could stretch if the months after funding come in light.
Returns and credit memos matter more in wholesale than in most retail. If you refund a damaged pallet to a customer's card, your net card deposits drop for that day. Ask the funder whether the holdback is calculated on gross or net settlements, and how chargebacks on disputed shipments are treated.
Watch for customer behavior changes during the term. If a large account switches from card to ACH to avoid card fees, your card volume falls and the holdback falls with it. Payback then stretches, and some agreements have minimums or reconciliation rules. Ask how reconciliation works before you sign.
What a good result looks like for wholesale distributors
Measure payback against your inventory turns. If you are buying stock you expect to sell within two or three months, a 13-month payback means you are still repaying long after that inventory is gone. A good fit is a holdback that leaves enough daily cash for payroll, freight, and supplier invoices, and a payback that lines up with when the purchased goods turn into receivables.
Then compare the cost of capital to what the money earns. If you are paying a supplier early to get a discount, or buying a truckload at a volume price, set the dollar savings next to the cost of capital. If the advance costs more than the discount saves, the math does not work, however fast the funding arrives.
Look at your processing statement before you borrow. Distributors often pay downgrade surcharges when commercial-card transactions go through without Level 2 or Level 3 data such as tax amount, PO number, and line items. Other common charges are PCI non-compliance fees, per-batch fees, and monthly statement or minimum fees. Removing these does not replace working capital, but it can lower what you need to borrow.
Frequently asked questions
Most of our customers pay by ACH or check on net terms. Is this estimator still useful for us?
Yes, but only enter the portion that settles through your card processor. A card-based advance is sized on, and repaid from, card volume. If cards are a small slice of your receivables, the estimated range will be small. In that case, a term loan, line of credit, or receivables-based financing may fit better, and the term loan comparison in the full breakdown helps you weigh that.
Do commercial and purchasing card transactions count toward our monthly card sales?
Yes. Any card transaction that settles into your merchant account counts toward card volume, whether it is keyed, paid through an invoice link, or run card-present at the counter. How a funder evaluates your card mix during underwriting is up to that funder, so treat the estimated range as a starting point, not an offer.
Our card volume spikes before our customers' busy season. What monthly number should we enter?
Use a trailing average across at least six months, or twelve if you are strongly seasonal, so the peak does not inflate the range. Then check the slow-sales scenario in the full breakdown. It shows payback with card sales 20% below your average, which is a reasonable stress test for the months after a peak.
If we refund a customer's card for returned or damaged product, does that change our repayment?
It can. With a percentage holdback, lower net card deposits usually mean a smaller payment that day and a longer payback overall. Some agreements calculate the holdback on gross sales instead. Ask the funder which method applies and how disputed shipments that become chargebacks are handled.
Would we have to move our card processing to get funding?
Some card-based advances require processing to run through a specific processor so the holdback can be collected automatically. Others use a split arrangement or a bank debit. If your current setup handles Level 2 and Level 3 data for commercial cards, confirm that any new setup does too. Downgrades from missing data can quietly raise your processing costs during the repayment period.