Businesses in the e-commerce space face high pressures for healthy cash flows, as businesses do in other industries. With money flowing in slower than it may be flowing out, combined with high costs of inventory, e-commerce businesses can face challenges. As an e-commerce seller you maintaining healthy inventory levels is critical. One way to alleviate cash flow challenges for e-commerce sellers is to leverage e-commerce inventory financing.
At Kickfurther, we provide e-commerce sellers an affordable and flexible solution for inventory funding. Here’s what you should know about optimizing cash flow for your e-commerce business.
Importance of cash flow optimization for e-commerce businesses
Cash flow is the movement of money in and out of a business.
Healthy cash flow is critical for eCommerce businesses. Businesses need cash on hand to cover expenses such as inventory. In the eCommerce space, there can be delays in incoming cash flow. Furthermore, cash can be tied up in inventory, which is the lifeblood for your business. As an e-commerce seller you face high competition and therefore, should always have enough inventory on hand to never miss sales.
Keeping a pulse on cash flow and planning ahead can help you optimize cash flow. In some cases, you may need to put solutions in place to optimize cash flow. Afterall, a negative bank account won’t get you far in business. Cash flow can be difficult and stressful to manage, but step up and dig in. Failure to manage cash flow can be detrimental to e-commerce sellers.
Common factors that can impact cash flow in an eCommerce business
- Inventory costs: Inventory can tie up cash flow, but it’s not something you can avoid as an e-commerce seller. However, there are some e-commerce selling models that allow you to eliminate inventory costs. E-commerce sellers often use inventory financing as a way to finance inventory to free up cash flow.
- Shipping costs: As an e-commerce seller, shipping is an important business function. However, it can also contribute to cash flow dilemmas. When a buyer orders a product, there is a delay between the purchase and the shipment and the delivery of the product. All of this can contribute to delays in cash flow. While you may not receive funds until after a product is delivered, you’ll still need to cover the costs associated with the sale. When shipping mass amounts, shipping costs can add up quickly.
- Storage costs: Storing inventory can tie up a significant amount of cash flow. As an e-commerce seller it’s important to have adequate inventory management techniques so that you don’t overstock or understock inventory.
- Shipping times: The quicker you can get products to customers, the quicker you can get paid in most cases. This is a simple way to improve cash flow. Remember that fulfillment involves more than just shipping times. The faster you can find, package, and ship the product, the faster it can be delivered.
Tips on how to reduce costs to optimize your cash flow
- Negotiating better deals with suppliers: Ensuring you keep costs as low as possible, without taking costly shortcuts can contribute to the bottom line. While this may not immediately help improve cash flow, it can have an impact. Suppliers may be willing to offer discounts on regular or bulk orders. You want to be reasonable with your supplier, but you should ask them from time to time if there are any ways you can negotiate a discount.
- Using more efficient shipping methods: Shipping is a big expense. From packaging to actual shipping costs, e-commerce sellers should evaluate shipping costs and methods on a regular basis. By doing so, you can grow the bottom line and optimize cash flow.
Importance of understanding your cash flow and creating a budget
Cash flow is not a black and white topic, and expenses can fluctuate. It’s a topic that should be evaluated on a regular basis. While budgets are important, monitoring cash flow on a regular basis is more important. When it comes to setting budgets, you should understand where money goes and how much activities cost. When you evaluate business finances and try to identify ways to improve cash flow, you’ll want to pay attention to the bottom line to ensure you are in the green, despite any cash flow delays.
Tips on how to forecast your cash flow and track your expenses
Forecasting cash flow is a skill that business owners should master. Here are some tips that can help track expenses in order to improve cash flow.
- #1. Invest in technology: Technology can help you track expenses and manage cash flow. Invest in systems that can help you automate expense tracking and learn how to use these systems.
- #2. Leave room for error: When it comes to forecasting cash flow, expect for some things to go wrong. Leaving room for error can be a useful tactic to maintain healthy cash flow. Plus, it can allow for expenses to fluctuate without causing cash flow to go red.
How inventory financing can help to improve cash flow
Inventory financing is a valuable way to improve cash flow. Rather than using cash reserves to fund inventory, use financing instead. While financing comes with costs, freeing up cash flow can create the opportunity to invest and
grow business. One of the challenges of inventory financing is often the costs associated as well as the requirements to qualify. At Kickfurther we strive to offer small businesses a funding solution for inventory that is affordable and flexible.
One of the biggest perks of inventory funding with Kickfurther is the ability to purchase inventory without having to pay upfront. Take advantage of the freedom to repay as inventory sells, so that you can maintain the healthiest cash flow possible.
How Kickfurther can help
E-commerce sellers may struggle to find affordable inventory funding that works. We understand the feeling of hopelessness as our founder was once in your seat. With the mission of helping small businesses obtain affordable inventory funding without the headache, we created Kickfurther. At kickfurther you can fund up to 100% of your inventory costs on flexible payment terms that you customize and control. With Kickfurther, you can fund your entire order(s) each time you need more inventory and put your existing capital to work growing your business without adding debt or giving up equity.
- No immediate repayments: You don’t pay back until your new inventory order begins selling. You set your repayment schedule based on what works best for your cash flow.
- Non-dilutive: Kickfurther doesn’t take equity in exchange for funding.
- Not a debt: Kickfurther is not a loan, so it does not put debt on your books. Debt financing options can sometimes further constrain your working capital and access to capital, or even lower your business’s valuation if you are looking at venture capital or a sale.
- Quick access: You need capital when your supplier payments are due. Kickfurther can fund your entire order(s) each time you need more inventory..
