How to get paid on time and grow your wholesale or distribution business faster

As a supplier, wholesaler or distributor in the Fast Moving Consumer Goods (FMCG) sector, your business likely deals with a high volume of B2B payments. And if you’re providing goods predominantly on trade credit, like many businesses, you are holding the financial risk of late payment within your business. Fortunately, digital transformation across your business in the form of integrated payments and flexible payment options can help to stop late payments in their tracks, grow sales and boost your cash flow. Not only will this strengthen your business, but it can improve cash flow across the supply chain too.

In this article, we outline how flexible B2B payment options can boost cash flow for your wholesale or distribution business.

Digital transformation remains a key opportunity for FMCG businesses

The digital transformation revolution has been evolving for decades, arguably starting with the introduction of computers to businesses in the 1950s. Companies have obviously progressed from this time. As cloud computing and data analytics become commonplace, the FMCG sector can benefit from the next crucial stage of digital transformation in business: integrated and flexible payments.

With solutions such as Spenda’s payment features offering the ability to achieve real-time ledger-to-ledger integration and stronger cash flow, sending hard copy invoices or PDF versions via email doesn’t provide the systems and tools you need to be competitive and continue growing. Businesses should provide flexible payment options to their customers to allow them to:

• Get paid faster
• Reduce late payments
• Boost cash flow
• Continue growing
• Create efficiencies
• Provide a better customer experience

How can FMCG businesses provide flexible payment options?

As outlined in a recent white paper, Flexibility in B2B payments: How an improved customer experience generates more sales, as many as 89 percent of Australian businesses still issue paper or PDF-based invoices when trading with business and retail customers. The increasing use of eInvoicing is helping some businesses streamline their invoicing processes, but it still doesn’t address the root cause of late payments or strengthen cash flow.

In recent years, payment flexibility has typically focused on B2C transactions with options such as Buy Now, Pay Later (BNPL) and credit cards giving consumers more ways to pay. With new B2B payment technology, your FMCG business can now offer flexible payment options to your business customers. These new payment options may include access to on-demand business finance through a BNPL arrangement, and credit card payments.

Whether you’re a direct supplier to supermarkets and other stores and businesses, or a distributor to retail networks, giving your customers flexibility in payments will:

• Reduce your financial risk, especially with BNPL transactions where a third-party provider finances the invoice
• Help your customers to boost their cash flow
• Provide a better customer experience ensuring customer loyalty and continued business growth

Providing on-demand business finance options through integrated payment technology will give your customers the ability to split their invoices into smaller instalments on a pre-agreed schedule with the lender. And with a third-party finance funding the transaction, your business will get paid in full, your financial risk will be minimised, and your customer will have more time to pay their invoice over smaller instalments on a schedule that better aligns with their cash flow.

It’s a win-win for suppliers and customers and it has the potential to improve cash flow across the entire supply chain.

Reduce financial risk and improve cash flow

New payment solutions are providing businesses with an opportunity to reduce their financial risk and strengthen their cash flow. Like other system improvements, it may take time to introduce and integrate the system internally and with your customers. However, unlike other digital transformation projects, where it can be difficult to quantify the positive impacts, your business will see value quickly as you get paid faster and instances of late payments reduce.

These positive impacts can help a business, whether a wholesaler or distributor, to invest in their next stage of growth, such as:

• Testing and developing new product lines
• Expansion to new markets
• Upgrades to machinery and equipment 
• Rebranding the business
• Preparing the business for trade sale or public listing

The potential and far-reaching benefits of stronger cash flow demonstrates the importance of digitising and introducing an integrated payment system and flexible payment options.

Not sure where to start with introducing payment options in your business?

With Spenda’s integrated technology, your business can access and provide business finance, set up pay-later plans with customers, and improve cash flow. Our tools not only help business owners to become more strategic, but they help businesses access what they need most for growth — stronger cash flow and working capital.

*This article is for general information purposes only. Consult a qualified financial advisor regarding any changes to or decisions about your business’s finances.