Unfortunately, not all businesses are successful. If you've reached the point where you're having to close your doors, bankruptcy inventory liquidation can help you claw back some much-needed cash.
In this guide, we'll go over who this process might be best for and what to expect.
When Bankruptcy Liquidation Makes Sense
When Bankruptcy Liquidation Makes Sense
Business bankruptcy tends to be the best option when debts are mounting, and there's little option to restructure to allow repayments. In bankruptcy cases, the company could earn more from an asset sale than continued operations. It's always best to speak to a bankruptcy lawyer to ensure it's your best option and to help you get the most favorable outcome.
Once you've made the decision on bankruptcy, finding a liquidation partner to take your remaining stock can be an important step to recovering money to help settle the bankruptcy case or to give you a little buffer for whatever is next in your professional journey. It can also help to free up warehouse space so that property can be sold or no longer rented.
How the Offload Process Typically Works
How the Offload Process Typically Works
You can expect the following steps:
- Cataloging Inventory: Work out what you have to offer first. It may be helpful to break them down into different conditions and/or what you expect to be in high demand.
- Gather Quotes or Decide to go it Alone: Approaching liquidation firms for quotes is likely the best idea, as getting everything wrapped up quickly is preferable in bankruptcy situations. Approach a company or two to figure out your best options in terms of money recovered. You could also decide to list the items or whole pallets yourself or run a clearance sale, but this will require more time input and comes with fewer guarantees.
- Arrange Pickup: If you decide to go with a liquidation firm, they should come and collect your inventory. You may need to pack up the items into pallets or arrange shipping yourself; make sure you know the terms of your contract before agreeing.
- Final Stages: You'll need to receive the right paperwork for your accounting purposes and also that all-important cash.
What to Expect From Valuation and Recovery Rate
What to Expect From Valuation and Recovery Rate
The amount you can expect to receive for liquidated inventory varies considerably depending on the type and condition of stock and who you partner with. As a general rule, bulk liquidation firms pay 10-30% of the market value of your goods in exchange for simplifying the process for you. Auctions direct to consumers can reach up to 50% of the market value for in-demand goods, but this higher value comes at the cost of the time spent sorting through stock and listing items, often individually. Getting multiple quotes can help you get a better idea of your product resale value.
A Typical Timeline From Contact to Payout
A Typical Timeline From Contact to Payout
You're likely looking at a few weeks overall for this process. This breaks down to:
- Initial Inventory Assessment: You'll need to take photos and provide details, which will likely take a few days. Most firms can provide a quote quickly after this initial assessment, usually in 24-72 hours.
- Sign a Contract: Once you've found a quote you're happy with, it's time to lock in and sign a contract. This can be sent over quickly, usually within a day or two.
- Inventory Collection: This is usually within a few days of signing a contract but can take a week or more for large stock or if collection is needed across multiple locations.
- Payout: This will vary depending on which firm you choose. Some pay out upfront once the shipment has been received and cataloged, which could take around a week. Others pay only once they've resold the items.
How to Choose a Liquidation Partner
How to Choose a Liquidation Partner
As with many business decisions, you should choose based on a solid reputation. Customer testimonials are a great indication they can be trusted, and if they've been in business for a long time, this suggests good links to resale channels. Ask how they pay, upfront or through a percentage, and what channels they use so you can understand if they're trying to get the highest price for your items.
Review the contract carefully so you know who is responsible for shipping and storage, and what fees are included. Why not start your quotes with us at Quicklotz , as we can get some of the highest returns for your bankruptcy liquidation inventory?
