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.
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.
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.
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.
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 middleman. Thanks to wholesale marketplaces, retailers can go online and contact manufacturers directly.
Invoice finance products for wholesalers
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 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 that will meet your needs both now and in the future.