The Financial Challenges Facing UK Businesses in the Wholesale Sector

Due to a number of factors, including the current economic climate – both here and abroad – the pressures on wholesale businesses within UK supply chains have meant that UK wholesalers have been facing major financial challenges. Many find it difficult to obtain the finance they need to grow their businesses and maintain sustainability.

Although wholesale is a huge sector, things aren’t always simple when it comes to financing and maintaining a healthy, stable cash flow. We are going to be looking at the financial challenges wholesale businesses are currently facing and what financial options are available to help them overcome these difficulties.

Current Challenges Facing Wholesale Businesses

The Global Pandemic

The COVID-19 epidemic has had major global repercussions. In response to the virus and imposed lockdowns, sectors, such as hospitality and leisure, were shut down for much of the previous two years. Supply chains have been severely disrupted, with most retailers experiencing reduced demand and witnessing accepted trading models changing overnight, putting increased strain on warehouses and distribution.

Customer Challenges

Another challenge wholesalers are facing is the ever-increasing customer expectations such as end-to-end supply chain visibility, 24/7 customer service, order tracking, and real-time stock management. These increased consumer demands add additional pressure to wholesalers.

Faster Delivery & Increased Demand

Customers and manufacturers can both place constraints on wholesalers to fulfil faster delivery time frames and keep up with increased demand.

Long & Late Payment Terms

Late payments, or agonisingly long payment cycles (30 – 120 days), within the wholesale industry cause pain across the board. This intern stops businesses from receiving the cash they have earned, and need, to settle their own accounts has a direct impact on day-to-day business operations and the ability to refresh stock.

New Equipment & Technology

Purchasing new and updated equipment makes the day-to-day operations of a wholesaler’s business a lot easier to keep up with demand. However, this modern technology and equipment cost a lot of money! It’s a double-edged sword.

Political Challenges

Pressure on wholesales has increased because of political circumstances. Distributors who deal with imports and exports have run into many difficulties; the flow of products in and out of the UK has been disrupted, as customs declarations and associated paperwork cause significant delays and some EU firms are afraid to conduct business with UK consumers due to the additional costs.

Fuel Price Increases

Fuel prices within the UK are at an all-time high again – placing a considerable financial strain on businesses.

Employee Working Conditions & Safety

With so many items crammed into huge warehouses, employee working conditions and safety must be a top priority. Businesses are required to have comprehensive insurance in place, regularly review workflows, and up to date systems and equipment. All of which incur additional expenses but are necessary.

The Current Economy

When the economy is strong, and retailers are buying, it can be easy to forget about potential low periods when retailers have to trim their spending. Failure to anticipate economic fluctuations could prove detrimental to any business.

Financial help in the form of Invoice Factoring

Extended payment terms are a headache for any wholesale business. It can often take up to 60 days for invoices to be paid, which puts a real strain on cash flow. This is where invoice factoring comes in. Invoice factoring is a type of funding that allows you to release the money tied up in your unpaid invoices straight away, giving you the extra working capital, you need to keep your business running smoothly.

Invoice factoring gives you access to the value of outstanding customer invoices before they are paid. Partnership Invoice Finance will expertly manage all aspects of your sales ledger management function, from the moment that you notify us of the sales transaction, to the point when the debt is paid.

Contrary to widespread belief, factoring is not just about how much prepayment can be drawn, but critically, the quality of service rendered. Reliable and efficient management of your ledger will naturally create strong cash flow. Our procedures rely upon personal, regular customer contact rather than just a sequence of statements and overdue letters raised and dispatched by an automated system.

Attention to detail is essential in determining the correct identity of the debtor and corresponding with them on a timely basis. A good rapport with your customer will ensure prompt payment of the debt. Our online system allows you remote access to your ledger and control account, enabling you to remain fully appraised of your position at all times.

Factoring is the key to ensuring business sustainable growth. Contact us today and let us help you keep your business on track.