Top 5 eCommerce Finance Solutions: Increase cash flow and get paid upfront for your inventory stock

Share this:

There’s no doubt that eCommerce in South Africa is booming. According to Statista, earnings in the eCommerce market are forecasted to reach US$8.46bn in 2022.

But to get a piece of this profit, eCommerce businesses need steady cash flow for things like inventory, wages, site maintenance, storage, packaging, delivery, and marketing. 

This article will unpack how to improve cash flow for your eCommerce store to grow your business and fund the future you deserve. 

What is eCommerce Financing?

eCommerce financing is a funding solution that increases cash flow for online stores. There are a number of  financing options available to assist eCommerce businesses including: 

All of these are solid options that can free up cash in a matter of days if you’re working with the right funder. Let’s look at each solution in detail. 

1. Inventory finance 

ecommerce finance warehouse

This is likely the best way to increase cash flow for eCommerce businesses. Inventory finance works for online companies selling fast-moving products with a profit margin above 30%.

Inventory finance involves a funder helping you identify the right stock, and then they buy it for you. You can use the freed-up stock to market your store to sell more products than you’ve ever sold – without ever running out of stock. And you only have to pay your funder for the stock after you’ve sold it. 

The result is that you have enough stock to supply the demand, so you never miss a sale, maximise your revenue, and take your business to new heights.

Inventory finance can help you ensure you have enough stock in the lead-up to busy periods such as Black Friday. In fact, it’s one of our top 5 tips to prepare for Black Friday.

2. Fast business loans

This is the most traditional way to get cash flow for your eCommerce business. A fast business loan can be as large as R7 million and take as little as 5 days to reflect in your bank account – depending on who you’re getting the loan from. 

Are you looking for a quick & easy business loan?
Get a fast, secured loan of up to R15 million approved within 5 days.
Click the button, fill in the form and one of our team will reach out to you!
Apply For A Loan

3. Trade finance 

ecommerce finance inventory finance

This funding solution works well for eCommerce businesses that ship their stock in from overseas. It’s especially good if your products are tangible and complete for the end-buyer and if you have a high margin trade cycle of at least 15%. 

There are various types of trade finance which will all help you increase cash flow for your eCommerce business. Here are the ones we offer at Geddes Capital: 

  • Pre-export trade finance
  • Letter of Credit
  • Supply Chain Finance
  • Import Trade Finance
  • Purchase Order (PO) Finance

With the inconsistency of the shipping industry, SMEs often get left behind in times of crisis – remember what happened in 2021 – so this kind of funding can be a lifeline for your business. 

4. Invoice discounting 

Invoice discounting unlocks working capital and saves you time and labour. Essentially, you ‘sell’ your invoices to a funder for a portion – usually 70% – of their value. So instead of waiting for clients to pay you, you get a portion of the money upfront. 

When the payment is due, your funder will collect it and pay you the balance – the other 30% – of the invoice less the interest charged. 

This option will work well if your debtors are frequent customers that you supply on an ongoing basis with payment terms of 30 to 60 days. 

5. Bridging finance 

This service is sometimes called a bridge loan and is a short-term loan that allows your company to “bridge” the gap to longer-term funding solutions. These loans typically have a term of 3 months to three years and are secured by property. 

This quick cash injection will work well if you have a big launch or sale coming soon. You can use it to boost your advertising efforts and ensure you have enough stock. Then, when the event is over and the stock has been sold, you can pay the bridge loan back with your business in a better place than when you started. 

Where to get eCommerce financing

When you’re looking for funding, your first stop will probably be your bank. Previous experience has shown that funding processes for SMEs through banks aren’t so fruitful. This is because they involve time-consuming paperwork, slow turnaround times, and requirements that many SMEs can’t fulfil. 

If a bank has rejected your business, or if you don’t have time to go through their application process because you need funding in days, not months, your best bet is to fill in an online application with a finance company that was built to help SMEs like yours. 

Because these companies are smaller than banks, they understand what it’s like to be an SME. Typically, they’ll have a more convenient application process, faster turnaround times, and more accommodating requirements. The right funder will feel more like a partner who is as invested in your business as you are.

– 

If your eCommerce business is based in South Africa, get in touch with our team at Geddes Capital and we’ll help you find the right funding solution to ensure success for your eCommerce store. We offer all of the above services and can customize them according to your specific needs. 

Geddes Capital
Need help? Let's chat!
crossmenuchevron-down