Just as the run-up to Christmas is peak season for retailers, so the run-up to the run-up is a bonanza for the wholesalers who supply them. However, as with retailers, this sudden spike in demand can cause a few problems.
As a wholesale business owner, you know when peak demand is going to be: it’s as predictable as Christmas. The problem is, you need a significant slice of funding to build up your inventories ahead of the rush – while knowing all along that your buyers won’t pay up until the New Year.
Many wholesale businesses play it safe by having long term business funding in place – often a business loan – which allows them to cover the ups and downs of seasonal trade fluctuations. Unfortunately, the costs of servicing that loan can mean much of the profit from the operation goes to the bank and its shareholders. At the same time, a loan is not flexible enough to provide real protection against seasonal spikes.
What Wholesalers Need
Ahead of an expected jump in demand for the peak season, wholesale business owners need to:
- Build their inventories.
- Ensure they have enough trained staff to cope with the peak.
- Prepare suppliers for last minute extra orders of popular products.
- Anticipate and solve any bottlenecks in logistics.
- Ensure they have enough money in the bank to do all that, and that there will be enough to get through the following two months before customers pay.
- Continue running the business while they do all of the above
Experienced wholesale operators will already have the skills to physically prepare their business for the peak season, such as hiring and training temporary workers; stocking up on popular seasonal items; and preparing their suppliers and logistics providers. What they may lack is suitable funding.
Various forms of cashflow finance can be combined in a way that is ideal for wholesalers looking to manage their cash situation through seasonal peaks and troughs, while at the same time ensuring they are always ready to meet extra demand and opportunities.
Financing Your Supplies
OptiPay offers a couple of very useful business finance options that can help wholesalers out in all kinds of ways, as well as funding their buying needs.
For those buying their supplies from abroad, trade finance is a perfect option. It is effectively custom-designed to allow businesses to import goods from abroad, taking advantage of competitive prices while shielding them from the risks and increased cashflow impact that overseas trade entails. With trade finance, a wholesaler can place large orders with foreign suppliers and have the balance owing paid on proof of dispatch. But the wholesaler won’t settle the bill with the finance provider until the goods are in the warehouse – or even on their way to its retail customers.
What’s more, a good trade finance provider like OptiPay will also provide logistical support, arranging for dispatches to be checked; goods to be shipped; and customs to be successfully navigated. All this on top of being an outstandingly cost-effective way of funding a build up in inventory, that always provides an appropriate amount of funding to your current business needs.
For those wholesalers who buy from Australian suppliers, supply chain finance is a similar product to trade finance, in that we can pay your suppliers straight away but give you time to get your goods and sell them on before you settle up. By taking advantage of early payment discounts, supply chain finance can even be free to the user, and has additional benefits in terms of cementing supplier relations and improving their ability to increase supplies as required.
Fund Your Business with Cash Flow Finance
Supply chain finance and cashflow finance can be used alongside invoice financing to ensure your business is funded entirely from its own income. This can be far more cost effective than permanently servicing a loan, while providing significant additional benefits in terms of cashflow management, security and the flexibility to grow of streamline the business and its funding very quickly.
To find out more about trade finance, supply chain finance and invoice finance, contact OptiPay today.
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.
