Wholesale Funding Solutions – An Expert Guide - Image

Wholesale Funding Solutions – An Expert Guide

Our latest guide details a range of challenges facing the UK wholesale sector today – such as wholesale funding, and how Touch Financial’s services can help industry players to manage their cashflow accordingly.

Scenario 1 – Place Competitive Bids in a Consolidated Market

With UK supermarkets increasingly seeking to gain a monopoly over the wholesale industry, some might argue that the sector’s players have never faced a greater uphill battle. Last November, food retail behemoth Tesco conducted a £3.7bn takeover of Booker Wholesale, a merger which Bernstein analyst Bruno Monteyne says gives Tesco “the assets to dominate wholesale supply of the £85bn out-of-home food market”. They’re not alone either; both Morrisons and the Co-op have acquired wholesale franchises of their own in recent months.

This ongoing industry trend of widespread consolidation will doubtless place substantial pressure on the wholesale sector, as smaller firms struggle to bid for work delivering consumables and other goods when facing off against these inter-business franchises. If that’s a concern for your business, particularly when late payments across the manufacturing supply chain can hamper you for up to 120 days at times, then now might be the time to consider pursuing financing solutions which can increase your ability to submit competitive tenders.

One key option available at Touch Financial is an unsecured business loan, a facility wherein a funder provides your firm with a pre-agreed amount of wholesale funding to be repaid over a set window of time. Cashflow boosts like these can fast prove invaluable for those businesses awaiting payments from their customers or suppliers who, in the meantime, want to place competitive bids against leading firms for wholesale work, but to do so without risking their ability to pay staff, drivers and / or suppliers in the meantime.

Scenario 2 – Limit Damage Caused by Manufacturing Supply Chain Issues

A second major problem cited by various industry players such as Bestway Wholesale Conference involves stock shortages across the manufacturing supply chain. Bestway told Talking Retail last month that in the worst cases their lowest-performing manufacturers were delivering as little as 69% of their promised stock on time, a shortfall which would spark obvious problems such as customers disgruntled at not receiving their goods and reduced sales subsequently impacting their profits.

Indeed, given that this troubling wholesale sector issue reared its head at last year’s IGD Wholesaling Conference, it’s clear that the challenges Bestway faces in 2018 will be shared by a host of other businesses across the supply chain. Whereas larger firms with other revenue income streams might possess the funds to weather the storm and await belated stock deliveries, for SMEs such shortages could greatly threaten their working capital, potentially placing them in critical debt with suppliers and lead them to administration as recently taken by major wholesaler Palmer & Harvey.

For firms looking to build their working capital to increase inventory or perhaps improve delivery capabilities in these challenging conditions, another SME wholesale finance solution is selective invoice finance. Unlike unsecured business loans, which involve funders providing their clients with a specific amount for repayment over a fixed loan term, selective invoice finance allows businesses to access a predetermined high percentage of their chosen invoices’ value – often within just 24 hours of raising them. If, for example, stock shortages threaten your business’ ability to hire 10 new drivers, then you could select those invoices whose combined value totals the funds needed to maintain your drivers’ wages until such a time when the stock shortfall has been resolved.

Scenario 3 – Adjusting route to market in line with demand shifts

What about those instances where suppliers in the wholesale sector must deal with radically increased demand? In the case of food wholesale for example, increased pressure from business rates, employment costs and evolving consumer behaviour towards food retailers and foodservice companies, is likely to affect competitive pricing and market penetration strategies, thus having a knock-on effect to associated wholesalers.

If wholesalers require funding to adapt, such as expanding their delivery operations with more headcount premise rental or improving their inventory management systems, securing an invoice finance facility could be an ideal solution to seize valuable business opportunities.

If you are considering new business development from the client distributor perspective, trade finance in conjunction with invoice finance, is a funding route commonly taken by wholesale businesses which Touch Financial have supported. With Trade Finance, sudden large volume orders for particular product categories surging in demand, can be fulfilled without having to be concerned with insufficient capital for supplier payments. This facility reduces both payment and supplier risk and is popular among trade transactions due to its letter of credit system.

Find out more

You can visit our invoice finance, unsecured business loans and asset finance pages for more information on all of our services covered here. But above all, get in touch today if you have any queries or want to pursue one of these wholesale funding solutions and one of our expert consultants will be happy to help.

Apply now and one of our consultants will help to find you the best invoice finance facility for your business, free of charge.

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