Wholesale distributor finance in Australia plays an important role. Without access to working capital through a solution like Invoice Finance, the wait for incoming cash flow can make it harder to fund large orders. This, in turn, can disrupt operations and hold back growth.
ScotPac works with small and medium-sized enterprises (SMEs) in the wholesale distribution sector to help them access tomorrow’s payments today. Explore our Invoice Finance solutions today.
Why do wholesale distributors in Australia feel a cash flow squeeze?
Invoice Finance for wholesale distributors can be critical. Why? Because when money is locked up in unpaid invoices but needed to fund new stock, that cash flow strain can create a real barrier to smooth operations.
A cash flow squeeze can:
- prevent you from taking on bigger contracts and customers
- make it difficult to place supplier orders quickly
- turn stocking warehouse shelves into a challenge
As customers can take 30, 60 or even 90 days to settle the invoices they owe your company, this can make it harder to fund your next order.
Invoice Finance for wholesale businesses works to reverse this cash flow squeeze. Fast and flexible, this working capital solution turns unpaid invoices into working capital ahead of customers settling their accounts.
How does Invoice Finance help wholesale distributors fund large orders in Australia?
Invoice Finance enables large orders to be fulfilled without having to wait for payment from your customers.
With a lender like ScotPac, eligible distribution and wholesale companies can access up to 85% of eligible invoice value upfront. Once the facility is set up, funding can often be available within 24 hours.
This means you do not have to wait for your customers to pay before easing cash flow pressure and funding your own large orders of inventory and stock from suppliers.
Wholesale distributors who use Invoice Finance can:
- pay their own suppliers
- meet payroll
- cover the costs of urgent stock orders
- ensure overheads are paid
How can Invoice Finance save wholesale distributors money?
For wholesalers and distributors, there can be money left on the table when stock or inventory is not ordered in bulk or paid for early.
Many suppliers offer discounts for large orders and early payment. Without access to Invoice Finance to fund large orders or facilitate early payment, businesses may be paying more than necessary and reducing their own margins.
Is Invoice Finance a strong fit for wholesale and distribution businesses?
Yes, it can be. Invoice Finance for wholesale businesses offers a range of benefits.
In Australia, wholesale businesses often operate on thin margins, take on large order values and allow for long debtor terms.
Thin margins can mean cash flow is tight.
Large order values can mean a lot of working capital is locked up in outstanding invoices.
Long debtor terms can create larger cash flow gaps.
Invoice Finance allows distribution companies and wholesalers to:
- pay suppliers upfront
- manage inventory more efficiently
- support ongoing operations
- bridge gaps in cash flow
Crucially, Invoice Finance for wholesale companies also allows for scalability.
Because the funding facility is tied to the value of eligible invoices submitted for financing, as your sales ledger grows, the amount you can access may grow too, subject to facility terms.
Are Business Loans a better wholesale distributor finance solution in Australia?
Business loans provide a lump sum injection of cash into a business. As part of the loan, SMEs are required to repay the borrowed amount in regular, fixed instalments, plus interest.
For wholesale distributors in Australia, a traditional business loan can provide some advantage when you are looking at one-off or longer-term investments.
For example, you may need to purchase a new warehouse to house your inventory, or vehicles for distribution purposes.
However, slower approval processes, taking on debt, possible property security requirements and fixed repayments mean business loans may not be suitable for wholesale distributors in all scenarios.
Invoice Finance for wholesalers allows for ongoing, scalable access to working capital designed to meet the fast-moving stock needs of the industry.
- Fast funding in as little as 24 hours
- Flexible limits
- No property security, as unpaid invoices serve as collateral
How do you know if Invoice Finance is right for your distribution company?
If the answer to the following questions is yes, Invoice Finance may be the right choice for your distribution company:
- Do you need to place a large supplier order but have customers with unpaid invoices?
- Do you need stock to meet the needs of a big contract or order?
- Does your business experience seasonal spikes that squeeze cash flow?
- Do you have customers on long debtor terms?
- Are you aiming to grow but do not want to take on traditional debt?
If so, give ScotPac a call or submit an enquiry to discuss Invoice Finance for your business.
