Wholesale and distribution – How the right finance solution can help overcome business challenges

What are the problems facing wholesalers?

"We cannot solve our problems with the same thinking we used when creating them" - Albert Einstein

The latest Close Brothers Business Barometer shows that late payments, working capital and bank charges have all jumped up the agenda for wholesalers and distributors, while competitors and cash flow remain persistant concerns.

#1 The competitive threat is constant for wholesalers

Economic confidence among small and medium-sized businesses has slipped, surveys show, leaving firms fearful about fighting for share of markets that may not be expanding as quickly as they had hoped.

The problem:

Almost one in five wholesalers continue to highlight competitive threat as a major concern.

The solution:

Wholesalers must decide whether the time is right to invest for growth, or whether to focus on protecting margins and consolidating market position.

The right funding solution needs to be considered to support both of these strategies.

#2 Late payments still causing problems

Hard-pressed small and medium-sized businesses are facing higher costs than ever before in chasing late payments, independent research shows.

The problem:

One in six wholesalers cite late payments as their main business concern, the highest figure in the Close Brothers Business Barometer since June 2014.

The solution:

While wholesalers must strive to ensure customers pay their bills on time, they have the option of monetising their unpaid invoices through invoice finance.

Invoice finance can generate capital even when clients continue to pay late.

#3 Lack of working capital is another key constraint

This is seen as one reason why British businesses are not as productive as their international competitors.

The problem:

13% of wholesalers have become increasingly concerned about where they will find additional working capital.

The solution:

Wholesalers looking to take advantage of the UK's economic recovery must put in place a funding strategy that will allow them to invest for growth.

#4 Bank charges cause wholesalers more difficulties than ever

The competition and Markets Authority is investigating whether banks are offering small and medium-sized enterprises a good deal on terms and conditions.

The problem:

11% of wholesalers said they were worried about bank charges in October 2015, up from 4% in December 2013.

The solution:

Many bank charges are the result of account defaults caused by problems such as late payments. By seeking financing solutions for such concerns, wholesalers can avoid incurring unnecessary charges.

Wholesalers and distributors at a crossroads

25% of wholesalers are confident about the prospects for the UK economy.

25% believe further declines may lie ahead.

The problem:

Some firms believe it's time to invest for the next phase of growth, while others are anxious to protect their current position, given the headwinds they continue to face.

The solution:

Wholesalers must address their business strategy for the months and years ahead according to their current views but, whether optimistic or more cautious, they will need a tailored funding and investment plan to fit their individual business's needs.

Imaginative and innovative financing can help them prosper.

To grow or consolidate?

"Life is like riding a bicycle: to keep your balance, you must keep moving." – Albert Einstein

Takeaways:

  • Cash flow remains a serious issue for one in six firms in the industry
  • Competitive threat is a major concern for wholesalers - almost one in five continue to highlight this issue
  • A lack of working capital is seen as a key reason why British businesses are not as productive as their international competitors
  • Wholesalers must decide whther the time is right to invest for growth, or whether to protect margins and consolidate market position
  • Seeking alternative forms of finance can offer wholesalers the opportunity to improve cash flow, leaving them free to focus on the business

Take a look at our latest infographic: Barriers to growth for wholesalers and distributors


Barriers to growth for wholesalers and distributors (infographic)