Are you looking for a more efficient way to turn inventory — one that allows you to buy more as you need it and not lose sales momentum? As an e-commerce seller, one way to accomplish this is with financing. It can help you bridge cash flow gaps, turn inventory quickly and set your business on a path for long-term multichannel growth.
To help you decide if outside funding is the best next step for your business, consider these five things every e-commerce seller should know about inventory financing:
1. Business financing is different than personal financing
A business loan and a personal loan are not created equal. You are more likely to lose money and put yourself in a bad financial situation with a personal loan than you are with a business loan. If you are using business financing responsibly, you stand to make money. For example, if you are investing in a proven product with demand on the marketplace, you are more likely to make money by using financing and purchasing a larger order. However, if you take out a personal loan to live beyond your means or pay bills you can’t pay, chances are you won’t be able to pay it back in a timely manner and will find yourself under a mountain of debt. One of the biggest mistakes business owners make is thinking of business financing as personal financing instead of as a tool used to scale your business fast.
2. Opportunity cost of not getting financing is high
Financing can certainly help you maintain (and grow) sales and increase profits, but the catch is that it’s not free money. That said, if you don’t have the means to replenish inventory and keep meeting demand, you risk running out of stock, losing sales and putting your entire account in jeopardy. You must consider each to determine which option will be more costly in the long run.
3. Invest in proven product
When borrowing money for inventory, you want to make sure that inventory will sell. After all, if you lose sales on product that you purchased with financing, the loan will be that much more difficult to pay off. So make sure to do research on the product in question, either by looking at your own sales history or by consulting a product research tool.
4. Scalability is key
To grow, you must be more efficient. That means finding ways to increase profits while simultaneously cutting costs or avoiding cost increases. When used responsibly, financing is a great tool to help you achieve this scalability and grow your business long term.
5. You can get financing in 24 hours without a single credit check
It’s true. Not all financing companies require a credit check — instead, they focus on your account health and sales performance. Take Payability, for example. A financing company designed specifically for e-commerce sellers, Payability offers a variety of cash flow solutions so you can grow your business fast.
With the Instant Advance option, Payability buys up to $250,000 of your future receivables at a discount, giving you a large lump sum of cash that you can use to invest in more inventory (or other growth areas). For up to 1% per week, Instant Advance can help you overcome any cash flow gaps preventing you from achieving scalability and long-term growth. That’s exactly the scenario Gina Goldring experienced. She grew her Amazon business by 50% in one month with her first Instant Advance.
Payability also offers Instant Access, a solution that pays you your marketplace income one business day after making a sale. And with its Seller Card, you can spend your payout even faster while earning up to 2% cashback on all purchases.
Blog post by Victoria Sullivan, a marketing manager at Payability.