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Wholesale Industry Finance

Getting large quantities of products to retailers is the lifeblood of manufacturers and that’s where wholesalers come in. But despite the importance of the industry, things aren’t always easy when it comes to financing. When you have more cash available, you can invest in more drivers, more fuel, make more deliveries and – most importantly – make more money.

But sometimes, it seems like an impossible feat to get that ever important cash when there are so many obstacles in the way.

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Financial challenges for the wholesale industry

Demands for faster delivery

These demands can come from both customers and manufacturers. This will be because it’s much more beneficial for each party to be able to sell to more customers within a shorter time period, regardless of the strain and cost this puts onto the wholesaler in the middle.

Fuel prices

With faster delivery comes more fuel usage, and with that comes a big consideration as to how much that fuel is costing. Some large companies have been known to levy fuel surcharges onto their services to suppliers, but smaller businesses may not have this option.

Employee safety

With so many products packed in bulk and, more often than not, in a big warehouse space, having employee safety in mind is a top priority. Naturally, this comes with its own expenses such as workplace insurance to cover you, and insurance to offer to your employees. And, because accidents happen, there is also the high expense of paying out.
To improve working conditions involves a cost, too, such as improving and streamlining workflow, or upgrading machinery. Asset finance can help with the latter.

Late payment or lengthy payment terms

One of the fundamental cash flow issues within the wholesale industry is the huge delay in receiving payments from work completion. Although there is tangible evidence of transactions often in the form of delivery notes, this doesn’t always equate to simple access to finance.

The wholesale industry often goes hand in hand with lengthy payments terms, anything from 30 to 120 days. This can stop you from getting your hands on the cash you have already earned – delaying your ability to cover the costs of running your business.

A cyclical economy

The economy goes through high and low periods, and failing to prepare for the low periods can be the downfall of any business. When other retailers are unable to make as big purchases as usual, this can severely affect the cash flow of a wholesale company, particularly if you’re reliant on large, regular orders.

Technology advancements

This can simultaneously be an advantage and a challenge in the industry. It can make a wholesaler’s life a bit easier with automated methods of distribution (such as VMI or Vendor Manage Inventory) but it can also make it easier for retailers and manufacturers to cut out the middle man. Thanks to wholesale marketplaces, retailers can go online and contact manufacturers directly.

Alternative financial products for wholesalers

Even with the worries above, this needn’t be the end of the world. Solutions to financial woes are available and Touch is here to help you find the one to suit you and find the finance your business deserves.

Invoice finance

Lengthy payment terms are the bane of any wholesaler’s business – so cut them down to just 24 hours with invoice financing. You can either go for invoice factoring, where you borrow the money and the customer pays the lender when invoice is due, or invoice discounting which is a more confidential method where the customer will pay into a trust account under your company’s name.

As the UK’s largest invoice finance broker, Touch is perfectly placed to help you find an invoice finance solution.

Asset finance

As mentioned above, advances in technology can be a great boon – if you can afford them. To take the guesswork and anxiety out of keeping up within the industry, look into asset financing to help you obtain what you need. This can include anything from vehicles to computers.

You can also explore refinancing if you have some valuable assets already, and see if they can help free up some working capital to help your cash flow and expenses.

Business loans

Whether you own assets or not, a business loan may be a good avenue to go down. If you own assets, use them as collateral to help you get a secured business loan for a higher amount. If not, then you could get an unsecured business loan instead and all you need is a personal guarantee.

Trade finance

Working a similar vein to invoice finance, trade finance helps you receive an advance on money that you’ve earned but are still waiting to receive, whilst keeping your supply chain moving. Simply confirm your order from your customer, receive the agreed amount from your lender, and carry on business as normal. When the payment is due from your customer, it is paid directly to the lender. This is particularly useful if you have any customers abroad and thus encounter some obstacles such as fluid currency exchange rates.

Get in touch

Our team of expert consultants can run through what your goals are for your business, and what finance solutions might work best. We have close relationships with over 35 of the top lenders in the country, and can help you find one specialising in the wholesale industry.

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Complete our quick form and we will be in touch to provide free, no obligation, impartial advice on funding options from over 35 lenders.

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