Agile and customer-centric approaches drive the core of businesses today. With the rise in internet shopping and the demands by customers wanting their product with minimal delay, wholesale businesses are under increasing pressure to adapt and refine their operations to stay relevant and competitive.
With the rising customer expectations and the growing gap between competitors adapting digitally, business owners need to look into how they can learn from today’s top challenges and use this knowledge to create solutions that will drive a business forward, profitably.
Challenge #1: Getting Paid on Time
Late payments mean poor cash flow, and this means putting immense pressure on the working capital of a business and its ability to cover its operating costs as and when they fall due. It lands up becoming very distracting for business owners, when they should be focusing on sales for growth.
While this is common, it doesn’t mean SME’s should just accept it. It can greatly impact the overall health of a wholesale business, which can lead to increased prices, more stringent payment terms, and eventually poor relationships between wholesalers and their customers.
In the long run, good supplier-wholesale-customer relationships that are based on on-time payments improves trust. It also promotes the overall efficiency of the supply chain, which ultimately makes all parties happy.
To ensure payment terms are met and never late, consider these tips:
- Provide the means to make it easy for customers to pay. This means offering customers various different payment options and platforms to pay. Be it, EFT; credit card; PayPal or other various means which are available today that provide timely and greater convenience and may actually be the preferred payment method for your customers. The easier you make it for your customers to pay, the faster they can pay you.
- Provide early payment discounts to customers. An old tried and tested option to getting paid on-time or even sooner, but seldom used today is to offer customers the option to pay sooner and be given an early payment discount off the value of the invoice. In this case both the wholesaler and the customer wins.
- Issue invoices that clearly outline payment terms, quantities, delivery notes etc. Always issue proof of receipts to avoid any unnecessary discussions on whether deliveries have been made or not.
- When issuing an invoice, ensure your customer receives it. A simple but very effective way to avoid disputes is when sending your customers invoices via email, always request that your customer replies stating that they have received your invoice; that it is correct and it is due and payable as per the agreed terms.
Challenge #2: Maintaining Positive Cash Flow
Proper cash flow management is crucial to any business as the absence of funds will hamper operational efficiency, and ability to execute on orders and close sales. It can also make it difficult for the business to get a return on investment, no matter how big or small.
Although the most common way to overcome the lack of cash flow is through a business loan, wholesalers need to explore more flexible finance solutions that can help them get the funding they need at a more reasonable costs and with a facility that can grow as the business grows.
Nowadays, wholesalers need flexible funding options and solutions that can help close their cash flow gap from months to days. With the growth of modern agile funding companies like OptiPay, it is easier to scale your business without worrying about insufficient or lumpy cash flows to grow. Funding solutions like Invoice Finance and Import Finance will greatly assist both cash flow and growth for wholesale business that could have working capital cycles of 150-180 days, from the time an order is placed with the overseas supplier to the time their customer in Australia pays.
With an Import Finance solution in place, you will have a line of credit (no property security required) for your businesses to pay for goods from overseas suppliers. OptiPay’s solution will not only assist you in paying the factory in full prior to shipment, but OptiPay then allows you up to 120 days to repay the facility.
The Invoice Finance solution allows you to release the value of unpaid invoices as soon as they’re raised. Using an invoice financing releases up to 85% of the invoice total value within 24/48 hours of being issued; allowing you to maintain positive cash flow, and invest money while you’re waiting for clients to settle their accounts.
Challenge #3: Improving Profitability
Wholesale businesses are in the midst of digital transformation as is the retail sector. It is time to explore how they can reimagine their business, push for innovation, and improve profitability for many years to come.
Industry leaders are now using data-driven insights to inform them of their decisions and strategy to improve business operations. Here are some crucial (but by no means exhaustive) questions you need to ask yourself so you can innovate and, therefore, improve your profitability:
- How can we provide a seamless and more personalised customer experience?
What new technologies can we adapt to accelerate supply chain planning and execution? - What online platforms can we use to supercharge purchasing and sales?
- How can we centralise our records system and seamlessly connect all crucial aspects of the business from our partners, suppliers, and customers?
- How can we best align our purchase orders to the payment terms of our suppliers?
- Exploring whether or not drop shipping work or indent orders?
- Would it be more efficient for you customers to place their orders with you online, in real-time and if so what is the best technology to implement for this?
- Are you able to negotiate discounts with your suppliers if you pay them sooner. Any discount negotiated results in the cash dropping to the bottom line.
Conclusion: What’s Holding You Back from Success?
With more companies today adopting agile solutions and a more customer-centric approach to business, it is clear that the way forward for wholesalers is to consistently innovate and maintain profitability now and into the future, utilising the above three and a rafter of other methods to stay ahead of the pack.
Don’t let the above-mentioned challenges stop you from reaching your full potential.
Harness bigger and better opportunities for your wholesale business. Download the ebook today to get started.
Who is OptiPay?
OptiPay, one of Australia’s leading business finance providers, has been dedicated to helping small business owners solve cash flow challenges for over a decade and has provided $1.5 billion in business funding to more than 500 Australian businesses. OptiPay specialises in modern financing solutions such as invoice factoring, invoice finance, debtor finance, and lines of credit. OptiPay’s mission is to support business growth providing liquidity in as little as 24 hours, ensuring they have access to tomorrow’s cash flow today. This rapid access to funds helps businesses maintain smooth operations and seize growth opportunities without the stress of cash flow constraints. At OptiPay, we believe that healthy cash flow is the lifeblood of any successful business. Our commitment to helping businesses overcome financial hurdles and achieve their growth ambitions has solidified our reputation as a trusted partner in the business finance sector. Whether you are looking to stabilise your cash flow, expand your operations, or navigate financial challenges, OptiPay is here to support your journey with innovative and efficient financing solutions.
