How eCommerce Sellers Can Solve Cash Flow Issues Quickly
by Victoria Sullivan
As an ecommerce seller, are you constantly finding yourself in a cash flow crunch? As you very well know, it’s difficult to maintain a steady source of cash when you don’t get your income for two weeks (or more). These payment delays make it nearly impossible to cover daily expenses, invest in growth or be prepared for the unexpected.
Thankfully, there are several ways to solve your cash flow issues quickly so you can start growing your business now. Here are five financing options that will help you do just that:
It’s very common for ecommerce sellers to tap into their savings to launch their businesses, invest in growth and bridge cash flow gaps. It’s a tempting financing option because the money is yours, so it’s free and available immediately. That said, you’ll eventually run out of funds. Not to mention, your savings should really only be used for emergencies.
Another way to help alleviate cash flow issues is by using credit cards. Not only can you spend money daily, but you’ll also likely earn cash back on your purchases, plus other perks. While these are great benefits, there are a few things to keep in mind. For example, spending limits, interest payments if you don’t pay in full or on time, and — if not used responsibly — dings to your credit score. Not only that, you may not be able to actually use a credit card when you need it. After all, some suppliers only accept wire transfers.
If savings or credit cards aren’t available to you, you may want to consider a business loan. There are several types of business loans out there and they typically fall into two categories: bank financing and alternative lending. Banks offer high dollar loans and lines of credit, long payment terms and low-interest rates, but the application process is long and tedious and approval rates are low — especially for online businesses.
On the other hand, alternative lenders promise higher approval rates, easier applications and faster funding times. The loans themselves tend to be smaller dollar and shorter term, and interest rates are higher than banks.
If you’re a private label seller, crowdfunding might be a good fit for your financing needs. Using sites like Kickstarter or Indiegogo, you can ask friends, family, even strangers to invest in your business. Just set up a fundraising page online and share it via email and/or on social media to solicit donations. Instead of interest payments, you’ll give donors rewards (like a product sample, for example) or, depending on the platform, equity in your business. But you’ll only get the actually proceeds if you raise a certain minimum amount, so you should only consider crowdfunding if you’re confident you can get donations.
In addition to the aforementioned options is a financing solution designed specifically for ecommerce sellers: Payability. To compensate for the payment delays imposed by most platforms, Payability gives marketplace sellers daily access to their income with two solutions:
- Instant Access: Get paid daily with Payability’s Instant Access product, which pays you your income one business day after making a sale. So if you sold $1,000 on Monday, you’d get $800 of it on Tuesday. The rest is kept on hold for returns/chargebacks and is then paid out according to the platform’s regular payment schedule.
- Instant Advance: Get a large lump sum of cash with Payability’s Instant Advance product. With this option, Payability buys a certain amount of your receivables at a discount, giving you the proceeds at once. For example, they would buy $5,000 of your future sales and give you $4,000.
- Payability Seller Card: You can get your Instant Access payments even faster (and even on weekends and holidays) on the Payability Seller Card. This pre-paid Visa card is accepted wherever Visa is accepted. Cardholders receive up to 2% cash back on all spend and up to 20% cash back on select seller tools. Here’s how it works.
Since 2016, Payability has helped more than 2,500 marketplace sellers grow — in fact, their daily access to cash from Payability has allowed them to grow 2.5x faster than their competitors. See how Jump City Toys, an Amazon seller and Payability customer, has been able to more quickly turn inventory and grow thanks to Payability. Then visit go.payability.com/AMZAlert to see how your cash flow issues can turn into growth opportunities. You’ll receive a $200 sign on bonus a discounted fees just for being referred by AMZAlert. You can find more about Payability and read real customer reviews on Trustpilot, Fit Small Business and Retail Dive.