What are net terms?

Posted on by Kaylyn Perry

Cash flow can be a problem for a majority of small businesses. As a way to drive sales while extending a helping hand, suppliers often offer net terms. Net terms can be thought of as a grace period. If you order products with net terms for payment, you can take some time to pay the invoice. While this helps the supplier sell more products and helps the client overcome cash flow challenges, it can result in cash flow challenges for the supplier. Wholesalers and retailers often need to use financing even with net terms options. However, net terms do not have interest and fees like loans do. Therefore, they should be explored. Keep reading to learn more about net terms and how they can help your small business. 

What are net terms?

The term “net” is usually followed by a number such as 10 or 20 or even 90. If you’re offered a net 20 term, you’ll be required to pay the invoice in full within 20 days of the invoice or specified date. Net terms can benefit the buyer and the seller. For the buyer, net terms give you some leeway. It can offer you time to buy the products you need, receive them, and maybe even sell some before having to pay. With 60% of small businesses suffering from cash flow challenges, there’s a huge demand for net terms. For sellers, offering net terms can create opportunities to make more sales. However, there are risks involved knowing that you’re giving a grace period to companies that are struggling with cash flow. Sellers should do their best to collect invoices as soon as possible. One way to motivate early payment is to offer incentives to clients that pay invoices early or within a set period such as 10 days.

How do net terms work?

Net terms allow customers to defer payment without any additional charges. In most cases, companies will offer net terms of 30, 60, or 90 days. If you’re offered net-90 days you will not have to pay the invoice in full until 90 days after the original invoice date. Even with such generous net terms, oftentimes customers still pay invoices late. As a result, cash flow is an ongoing challenge for both parties. Wholesalers and retailers can use various types of financing to overcome cash flow challenges. Now you may be wondering why wholesalers don’t just offer financing for customers. While this is certainly an option, it can be costly for both parties. Some companies may need to use a mix of net terms and financing to keep cash flow healthy.

Why does a business need net payment terms?

The main reason customers need net payment terms is cash flow. By offering net terms you can recruit more customers than if you require immediate payment. Extending payment periods may spread your cash flow thin, but it can also boost revenues significantly. Once you’ve dialed in which customers take advantage of the net terms, but are reliable for repayment, do everything you can to foster the relationship. As a supplier, you may need to leverage your own financing in order to offer flexible repayment schedules for customers. 

Common types of net term arrangements 

There are a few different types of net payment arrangements that are commonly used. Here are a few common types of net terms.

#1. Net 30/60/90

Net 30/60/90 allow customers to essentially defer payment. For example, if you have net-30 terms, you have 30 days to pay your invoice in full. While 30 days, 60 days, and 90 days are common terms, other terms can be offered as well. Some businesses may offer terms as long as 180-days or as short as 7-days. Timelines can vary too. In some cases the timeline for repayment may start when the sale is made. In some other cases the timeline may start when the invoice is created. Whether you’re the supplier or the customer, make sure the timeline is clear. 

#2. Discount terms

Discount terms and net terms can be used in combination. For example, a 3/14 net 60 term would mean that you get a 3% discount if the invoice is paid in full within 14 days. Otherwise, you will be charged in full and required to pay in full within 60 days.

#3. End of month terms (EOM)

Month end is a hectic time for most businesses, so EOM terms may not be as favorable, but they may be your only option. EOM terms allow customers to pay invoices within a specified number of days following month end. 

Example of net terms

An example of net terms is 30-day net term from the date of invoice. In this scenario, you’d need to pay the invoice in full within 30 days of the day on the invoice. 

Pros and cons of providing net terms

As with anything, net terms come with pros and cons. Before offering net terms you should evaluate the general pros and cons and those specific to your situation. Here are some general pros and cons of providing net terms.

Pros:

  • Expand and diversify customer base 
  • Gain customer loyalty
  • Encourage larger orders 

Cons:

  • Cash flow problems
  • Risk of late or no payment 
  • More staffing required to manage accounts receivable 

How net terms impact your cash flow

If you’re the one providing net terms they can strain cash flow. If you sell $10,000 of products, but have to wait 30 or 60 days for payment, will you have enough cash to order more products? What happens if the customer does not pay? There’s also the chance that you’re offering net terms and using them also from your supplier. A no payment or late payment incident may cause you to default on payment as well. It’s important to always have a backup plan and closely monitor net term accounts. 

How to decide whether net payment terms are right for your business

Whether you’re offering or accepting net terms, there are some things you’ll want to consider. No matter which side of the table you’re on, repayment will be key. As a customer using net terms you should be confident that you’ll be able to repay the supplier on time. As a supplier, you’ll want to prioritize customers with a proven track record of repaying on time. If your business is constantly borrowing money and going further into debt, rather than growing and seeing the light at the end of the tunnel, net terms may not be the best idea. They are designed to improve cash flow and help grow your business, not cause additional problems. 

Do alternatives to net payment terms exist?

Alternatives could include paying on time or paying early to receive a discount However, for companies that truly need the net term to pay in full, these alternatives may not be satisfactory. One of the best alternatives to net terms is inventory financing or funding, which can be used by any product-based business (retail and wholesale). The key to inventory funding is to find a source that offers flexibility and affordability. You want to avoid driving costs up as a direct result of simply just trying to manage cash flow. You also want to avoid having to reapply for a loan on a regular basis. For companies that need access to funds for inventory on a regular basis, Kickfurther can help. Once you’ve set up an account and received funding, it’s easy to come back for more funding. In fact, companies with successful funding under their belt can receive discounts for future rounds of funding. 

How Kickfurther can help

The reason companies often shy away from financing and funding is the cost and complexity. However, if you could receive funding for inventory that was affordable and easy, would you even need net terms? Both retailers and wholesalers can take advantage of inventory funding at Kickfurther. 

Kickfurther is the world’s first online inventory funding platform that enables companies to access funds that they are unable to acquire through traditional sources. For companies that sell physical products or non-perishable consumables and have revenue between $150k to $15mm over the last 12 months, Kickfurther can help. We connect brands to a community of backers who help fund inventory on consignment and give brands flexibility to pay that back as they receive cash from sales. With more than $100 million in inventory funded to date, Kickfurther can help you get funded within a day or even minutes to hours. 

Closing thoughts

Overcoming cash flow challenges is just part of being a business owner. Luckily, there are ways to improve cash flow. One of those being net terms. While net terms may help grow your business, if you’re the one offering net terms it can make cash flow even more challenging. By turning to alternative funding methods such as Kickfurther, you can get the cash you need for inventory. As a result you can offer net terms to more customers, or perhaps even share your secret with them so they won’t need net terms anymore!

Interested in getting funded on Kickfurther?  Create a free business account, complete the online application, review deals, and get funded in as little as minutes!

5 Critical Questions a Solid Financial Model Answers for You

Posted on by Kaylyn Perry

Ahh, yes, the exhilaration of being an early-stage startup. And by “exhilaration,” we mean terror. Just total, complete, absolute, abject terror.

Look, we get it. We’ve been there. Being a founder can sometimes feel like you’re herding cats with one hand and shoveling the ocean with the other.

So many things are thrown at you simultaneously – research and development, marketing, fundraising, technology, accounting, and humans – it just feels like the weight of the world bearing down on your shoulders.

And the worst part? Managing these disparate and unrelenting streams of information feels next to impossible.

We have good news. With the right toolset, you can get your arms around the challenges you face as a founder and begin to make confident decisions about every aspect of your budding business. It all starts with your financial model.

5 Critical Answers a Financial Model Provides

What Is a Financial Model?

Your financial model should be more than just a spreadsheet. Done correctly, a model allows you to track and forecast your expenses, compare alternate scenarios, and analyze your return on different revenue streams.

How it works is relatively simple: You gather up all of your available financial data and put it into a format that allows you to project your growth rates into the future. You get a clear picture of your financial future that you haven’t seen before, and your runway comes into sharp focus.

If you use a software solution like Forecastr, you can model different scenarios to evaluate the future impact of decisions you make today – like new hires, new marketing strategies, or new office space. You can experiment to see the impact of increasing your conversion rate on one traffic funnel while cutting your spending on another.

Simple charts and graphs show your historic performance, your current trajectory, and your future projections – all in one dashboard. But the proof is in the pudding, so let’s take a look at 5 critical questions that are answered by a good financial model.

How Much Money Should You Raise?

Let’s say you’re in a meeting with a potential investor, and they say, “You say you need $X. Why? What do you need that amount for?”

This is a make-it-or-break-it moment. If you hesitate, you could lose the deal.

With a financial model in your corner, you can answer this question with confidence, knowing that you have sound data to back up your ask. Rather than a stack of receipts and spreadsheets, you can share a compound graph that shows your categorized expenses with the cost of scaling built-in.

A good model also lets you plan for environmental changes, so you can be prepared for cost increases, supply chain issues, upstart competitors, and more. Show your investor that you don’t just have a great plan, you also have a backup plan that accounts for their objections.

How Should You Spend the Money?

As we’ve discussed, financial modeling is about much more than simply forecasting your current revenue and expenses.

When you understand the cost, volume, and return on each of your revenue streams, you can make better decisions about how to allocate your budget for marketing and sales.

When you can visualize the production impact of a new piece of equipment or a new manufacturing process, you can ensure that you invest at the optimum time.

Decisions like these are critical for early-stage startups with limited resources. Sometimes you simply don’t have the luxury of learning a lesson the hard way and you need to get it right the first time because a second chance may never come.

A financial model lets you plan for success. You take everything into account, including time, and you spend your money wisely at the right moment. Having a plan like this instills great confidence in your investors, your team, and most importantly – you as a founder and fundraiser.

What Should Your Hiring Plan Look Like? (Who can you afford?)

Even in the topsy-turvy world of an early-stage startup, people are a unique challenge. Culture fit, development methodologies, working styles, variable compensation plans, dietary restrictions – it’s never easy to manage humans.

Gauging when and where to invest in talent is one of the most consequential calls a founder makes. Which positions require the most expertise and leadership? Which positions can be postponed for a while? Which positions can be eliminated?

A financial model shows you the impact of every position. You can see the significance of each position in terms of its cost and its return in revenue or production.

This lets you build an optimal hiring plan, within your existing budget, with a clear understanding of how each hire impacts your runway and your time to profitability.

Investors know that these details are often overlooked by early-stage founders. If you can demonstrate that you have optimized your hiring plan to emphasize the most impactful positions and hire them at the right time, you will be the exception.

You’ll be exceptional!

What Acquisition Channels Should You Focus On?

Marketing does not come naturally to some founders, and that’s OK. Talk to a professional marketer and they’ll tell you that marketing doesn’t come naturally to anyone. Good marketing requires measurement, iteration, and tons of creative thought. Good marketing is not a deliverable, it’s a learning process.

But when you’re just getting started with a limited budget, it can be very hard to determine which acquisition channels you should invest in. A financial model takes the guesswork out of these decisions and gives you a clear understanding of your return on each channel.

Sometimes your highest volume channel is not your most profitable channel. Sometimes there’s a uniquely profitable channel that you’re overlooking. A financial model takes into account each channel’s cost of acquisition, churn rate, and long-term profitability, allowing you to optimize your spending across the board.

This information will have any investor licking their lips. But it’s also useful to you in your day-to-day role as a founder. When a given channel isn’t performing well you can start to isolate the cause, or just cut it off entirely to focus resources on another funnel.

How Many Customers Do You Need to Hit $1M in Annual Revenue?

It’s the million-dollar question. And it’s not just a random benchmark – it’s a question you’re very likely to hear from investors as they gauge the timing of your opportunity.

When will you hit $1M?

Expectations are everything here, and a solid financial model lets you set expectations as accurately as possible.

Obviously, no one can predict exactly what will happen. As we say here at Forecastr, 100% of financial models are wrong. But without a crystal ball or a divine oracle, a living financial model gives you the most accurate information about when you’ll reach $1M in annual revenue.

Your model gives you realistic expectations about your revenue, churn, and growth rate over time. You simply pass that information along to your investors. Explain the assumptions behind your projections and show them that it’s all backed up by reliable data.

You’ll rest easy knowing that you’ve given your investors realistic expectations. If a cash injection would help you reach that magic number faster, you’ll make a great case for them to provide that cash.

How To Get Started

As you can see, a solid financial model can be the difference between your startup locking in its next funding round or running out of cash. For you as a founder, it can be the difference between nailing your growth targets or struggling just to keep your numbers positive.

You can get started with a new financial model today. We have a set of free spreadsheet templates any founder can use to create an instant financial model. Just add your historical financials, calculate your current growth rates, and plug in your assumptions about future growth.

This is a guest post from our partner Forecastr. If you want a great financial model, and you want help building it, our online service gives you a purpose-built interface and a team of dedicated analysts to help you succeed. Reach out to Forecastr now to learn more.

Accounts Receivable Financing vs Inventory Financing

Posted on by Kaylyn Perry

Both accounts receivable financing and inventory financing are common ways to get financing for your business. But which one is right for you? Here’s a look at the pros and cons of accounts receivable financing vs inventory financing. Let’s dive in.

Inventory Financing vs. Accounts Receivable Factoring

There are a variety of financing options available to businesses, and each has its own pros and cons. Two of the most popular options are inventory financing and accounts receivable factoring. So, which is the best choice for your business?

Inventory financing is a loan that is typically secured by inventory. The upside of this type of financing is that it can be easier to qualify for than other types of loans, and you should not have to pledge personal collateral. In addition, it can give you the funds you need to stock plenty of inventory. The downside is that it can be expensive, and if your inventory isn’t selling quickly, you could end up paying interest on money that’s not making you any money. If you have inefficient inventory systems you may end up overstocking inventory and borrowing more money than you can afford to repay.

Accounts receivable factoring allows you to sell your accounts receivable to a factoring company at a discount. The factoring company then collects the payments from your customers. This type of financing can be helpful if you need quick access to cash, but it can also be expensive. In addition, it’s important to make sure that you’re working with a reputable factoring company, as there have been cases of fraud in this industry.

What is accounts receivable factoring?

Accounts receivable factoring is a type of financing in which a company sells its accounts receivables to a financial institution at a discount. The financial institution then collects the payments from the company’s customers. 

For example, Company A has $100,000 in accounts receivable and needs cash immediately. It factors its receivables by selling them to a bank for $90,000. The bank then collects the full $100,000 from Company A’s customers. 

Accounts receivable factoring can be a useful way for companies to raise cash quickly, but it can also be expensive. The discount rate charged by the financial institution can be as high as 10%, which means that the company will only receive 90% of the value of its receivables. In addition, accounts receivable factoring can be complex and time-consuming to set up.

What is inventory financing?

Inventory financing is a type of short-term loan that business owners can use to cover the cost of inventory. This can be helpful when cash flow is tight and businesses need to purchase inventory in order to meet customer demand. 

For example, let’s say that a clothing retailer needs to restock its shelves but doesn’t have the cash on hand to do so. The retailer could take out an inventory loan to cover the cost of the new inventory. 

Once the inventory is sold, the loan can be paid back with the proceeds. Inventory financing can be a useful tool for businesses, but it’s important to understand the terms of the loan and repayment schedule before signing on the dotted line.

What are the main differences between both options?

While both options are designed to improve cash flow, there are several differences. In most cases, factoring should be used first. Later on, financing can be used to further improve working capital. Here are 3 differences between the two options:

#1. Valuations

Most inventory financing advances 70%-80% of appraised inventory value. Since appraised value is usually lower than market value, this can affect the amount you are able to borrow. Invoices on the other hand are typically financed with a 70%-80% face value. 

#2. Requirement to qualify 

Invoice factoring is usually easy to qualify for. As long as invoices are free of liens and payable by commercially creditworthy companies, you should be able to qualify. Inventory financing can have more requirements such as time in business, inventory systems, solid financial statements, and more. 

#3. Upkeep

Inventory financing may require more frequent maintenance which may add to operating costs. Accounts receivable financing may only need to be examined once a year.

How both options can be used together

Inventory financing allows businesses to use their inventory as collateral for a loan, while accounts receivable financing entails selling your invoices at a discount in order to receive immediate payment. While each option has its own advantages, using them together can provide significant benefits.

By using inventory financing to purchase inventory and accounts receivable financing to cover the cost of the inventory, businesses can free up working capital that would otherwise be tied up in inventory. 

This can be especially beneficial during periods of high growth, when businesses may need to purchase large quantities of inventory but may not have the cash on hand to do so. In addition, using these two methods together can help businesses manage their cash flow more effectively and make it easier to meet their short-term financial obligations.

When to consider applying

Most businesses can benefit from inventory financing. Usually when they begin to feel a need for it though is during growth stages. If cash flow is tight and sales are growing or trying to grow, inventory financing can help you get to the next level. By freeing up cash flow and ensuring you have plenty of inventory, you can take advantage of more opportunities. 

Seeking for inventory financing? 

One of the biggest challenges of inventory financing are the requirements and the cost. Entrepreneur Sean De Clercq was once in your shoes; hopelessly searching for an affordable way to grow his company. In 2014, he founded Kickfurther. In true entrepreneur fashion, he found a solution for a major problem business owners are facing. He created a company that helps businesses get affordable inventory financing with less obstacles. Kickfurther is the world’s first online inventory funding platform that enables companies to access funds that they are unable to acquire through traditional sources. For companies that sell physical products or non-perishable consumables and have revenue between $150k to $15mm over the last 12 months, Kickfurther can help. We connect brands to a community of backers who help fund inventory on consignment and give brands flexibility to pay that back as they receive cash from sales. 

Grow your business with Kickfurther

With Kickfurther you can fund millions of dollars worth of inventory at costs of up to 30% lower than the competition. It gets better though – you don’t pay until you start making sales. You’ll truly have the opportunity to create a payment schedule that works for your business. You’ll outline expected sales periods to create customized payment terms. With more than $100 million in inventory funded to date, Kickfurther can help you get funded within a day or even minutes to hours. 

Interested in getting funded on Kickfurther?  Create a free business account, complete the online application, review deals, and get funded in as little as minutes!

Benefits of Inventory Financing for Startups

Posted on by Kaylyn Perry

In today’s economy, it can be tough for startup businesses to get the financing they need to get off the ground. Traditional lenders are often hesitant to loan money to new businesses with no track record. However, with the rise of startups that are changing the world, more and more avenues are becoming available for startups to secure financing. One being inventory financing or funding. Keep reading to learn more about inventory financing for startups. 

What is inventory financing for startups?

Inventory financing is a type of funding that allows startups to purchase inventory without having to front the full cost. This can be a useful tool for companies that are growing quickly and need to keep up with customer demand, but don’t have the cash on hand to do so. 

There are a few different ways to finance inventory, but the most common is through a line of credit. This allows startups to borrow money as needed and only pay interest on the portion of the line that they use. Inventory financing can be a valuable tool for startups, but it’s important to understand the risks involved before taking on this type of debt.

Why startups seek inventory financing

Startups often have a lot of difficulty securing financing because they don’t have any collateral to offer lenders. Inventory financing is one option that can be helpful for startups because it allows them to use their inventory as collateral. 

This type of financing is often easier to obtain than other types of loans, and it can provide the startup with the capital it needs to grow. However, it’s important to remember that inventory financing comes with some risks. 

If the startup is unable to sell its inventory, it may end up defaulting on the loan. As a result, startups need to carefully consider whether inventory financing is right for them before making any decisions.

Top benefits of inventory financing for startups

While there are some costs associated with this type of financing, such as interest and fees, the benefits can far outweigh the costs for many businesses. As a result, inventory financing can be an essential tool for startup businesses. 

Inventory financing allows you to keep your startup business fully stocked

This type of financing allows you to keep your business fully stocked, which is essential for keeping customers happy and generating revenue. 

Potential lifeline especially for seasonal startup based businesses

Inventory financing can be a lifesaver for startups, especially those that are seasonal or have been denied for a traditional loan. 

In short, it  can give your startup the boost it needs to get off the ground and become successful. By making it easier to obtain the inventory you need, inventory financing can help you avoid the pitfalls that often plague new businesses.

Startups that have previously been denied for a traditional loan may qualify for inventory financing instead

Many startups are denied for traditional loans because they lack the necessary collateral. However, these businesses may still be able to qualify for inventory financing. This type of financing allows businesses to use their inventory as collateral for a loan. 

As a result, businesses can access the funding they need to purchase additional inventory or invest in other areas of their business. Inventory financing can be a great alternative for startups that have been denied for a traditional loan. It can help them to grow their business and reach their full potential.

Better access to working capital

With inventory financing, businesses can access the working capital they need to purchase inventory, without having to tie up other business assets as collateral. This type of financing can be particularly helpful for businesses that have seasonal inventory needs or those that are expanding their product offerings. 

In addition, inventory financing can help businesses smooth out cash flow fluctuations and free up working capital for other purposes.

How much can startups borrow towards inventory financing?

Startups can often have a difficult time securing financing, as they typically have little to no collateral and are considered high-risk by lenders. Inventory financing can be one option for startups looking to finance their business. This type of financing allows businesses to borrow money against the value of their inventory, using it as collateral. The amount that startups can borrow towards inventory financing will depend on the appraised value of their inventory and the lender’s policies. In most cases, inventory financing will only allow startups to borrow 70%-80% of the appraised value. For startups, this may not be enough funding. Oftentimes, startups struggle to afford inventory financing as well. For these reasons and more, startups often pursue alternative types of inventory funding. 

Is inventory financing for startups worth it?

Startups face many challenges when it comes to financing. They may not have the credit history or collateral required to qualify for a traditional loan, and they may not yet be generating enough revenue to fund their operations through cash flow. Inventory financing can be a viable option for startups that are struggling to secure funding. 

With this type of financing, businesses use their inventory as collateral for a loan. This can provide them with much-needed working capital to invest in new inventory, expand their operations, or cover other expenses. 

However, it’s important to note that inventory financing can be risky. If a startup is unable to sell its inventory, it may struggle to repay the loan and could even default on the loan. As a result, startups should carefully consider whether inventory financing is right for them before moving forward.

What is the best way startups can finance inventory?

Startups face a unique challenge when it comes to financing inventory. 

On the one hand, they often have difficulty accessing traditional forms of credit, such as bank loans. On the other hand, they may not have the capital necessary to purchase inventory outright. As a result, many startups are forced to look for alternative financing options.

One option is to use credit cards. This can be an effective way to finance inventory, but it can also be expensive. 

Another option is to seek out investors. This can provide the startup with the capital necessary to purchase inventory, but it can also be a high-risk proposition. The best way to finance inventory will vary from startup to startup, depending on the circumstances. In most cases though the answer for getting the working capital needed to purchase inventory will be Kickfurther. 

How Kickfurther can help

Startups face a lot of challenges when it comes to financing their operations. One of the most difficult tasks is often securing enough funding to purchase inventory. This is where Kickfurther can help. Kickfurther is the world’s first online inventory funding platform that enables companies to access funds that they are unable to acquire through traditional sources. For companies that sell physical products or non-perishable consumables and have revenue between $150k to $15mm over the last 12 months, Kickfurther can help. We connect brands to a community of backers who help fund inventory on consignment and give brands flexibility to pay that back as they receive cash from sales. 

With Kickfurther you can fund millions of dollars worth of inventory at costs of up to 30% lower than the competition. It gets better though – you don’t pay until you start making sales. You’ll truly have the opportunity to create a payment schedule that works for your business. You’ll outline expected sales periods to create customized payment terms. With more than $100 million in inventory funded to date, Kickfurther can help you get funded within a day or even minutes to hours. 

Interested in getting funded on Kickfurther?  Create a free business account, complete the online application, review deals, and get funded in as little as minutes!

Five tips for continuing the Prime momentum through the end of the year

Posted on by Kaylyn Perry

Prime Day 2022 may be over, but your Prime Day momentum should not be. Now is the time to re-engage your target customers and ensure you are prepared to build and meet continuing demand for your Amazon products through the end of 2022.

Here are 5 ways to ensure that your Amazon sales continue to flourish after Prime Day 2022.

Increase advertising budget

Amazon sponsored advertising is a great way to increase your sales on Amazon. By targeting relevant keywords and phrases, you can ensure that your product appears in front of potential customers who are already interested in what you’re selling. 

You can also use Amazon’s impressive data and analytics tools to fine-tune your campaigns and improve your ROI. And best of all, you only pay when someone actually clicks on your ad, so you can be confident that you’re getting a good return on your investment. 

Boost product reviews

Nothing says to a potential buyer, ‘this is a great product’ like positive customer reviews. Customers place a high level of trust with sellers who have numerous reviews. If you do happen to receive negative feedback, make sure you address it immediately.

Encourage customers to leave reviews as often as possible. Well worded, timely feedback requests can massively improve the amount and quality of feedback. 

Amazon makes it easy to request feedback from your customers. Use Amazon’s “Request a Review” button to manually request reviews for each of your orders in Seller Central within four to 30 days of purchase. Or streamline your reviews by utilizing eComEngine’s FeedbackFive tool, which is designed to save you time by automating the Amazon review management process. 

Optimize your listing

The more accurate and descriptive your listings, the higher the chances you’ll get a conversion. You’ll want to double check everything. Including the product title, category, bullet points, images, and full descriptions. Make sure everything is accurate, clear, includes the relevant  keywords and that there are no duplicate product pages.

Amazon uses an algorithm to prioritize product suggestions to its customers. The algorithm is based on seller conversion metrics, like price, performance, customer satisfaction and sales history. By not optimizing your Amazon product listings you limit their discoverability, potentially losing out on sales.

Your title should be attention-grabbing and keyword-rich, so that it appears near the top of search results. And your product description should do more than just list features — it should also tell a story that speaks to the needs of your target customer. By crafting persuasive copy for your Amazon listing, you can give yourself a big boost in the search rankings and convert more browsers into buyers.

Use relevant keywords throughout your description so that potential customers can easily find your product when they search on Amazon. In addition, you’ll want to make sure that your descriptions are clear, concise, and easy to read. 

Use bullet points or short sentences to get your point across, and avoid using jargon or technical terms. You should also include important information such as size, weight, color, and material in your description.

Fulfillment-orders arrive on time

Amazon recommends that sellers maintain an on-time delivery greater than 97% in order to provide a good customer experience to buyers.

Fulfillment occurs after Amazon accepts a customer’s payment without a problem. The customer’s order will move to the shipping process through Amazon’s fulfillment center unless it is seller-fulfilled. 

Amazon’s shipping process includes:

  • Preparing your item for shipment
  • Boxing it 
  • Labeling it
  • Sending tracking information to the carrier

Can you meet two-day shipping obligations as a Prime seller? By enrolling in the Amazon FBA program, you’ll automatically become a Prime seller, and Amazon will handle shipping for you. 

But if you prefer to handle fulfillment in-house, you can join the seller-fulfilled Prime program and manage the process without Amazon’s assistance. Whatever you decide depends on what works for your Amazon business.

Amazon recommends following these best practices to avoid customer order cancellations and late shipment penalties:

  1. Set accurate quantities and production times
  2. Set accurate transit times
  3. Confirm orders quickly/on-time
  4. Ship orders within the production/handling times you set

Stock enough inventory

As an Amazon seller, one of the worst things that can happen is running out of inventory. This can lead to lost sales and unhappy customers. There are a few things you can do to avoid this problem.

Keep a close tab on your inventory levels. Make sure you know how much you have in stock at all times and how fast it is selling. Use this information to place regular orders with your suppliers to ensure you never run out of stock.

You can also use a tool like Restock PRO by eComEngine to ensure you never run out of inventory. RestockPro is a tool that facilitates FBA inventory management from forecasting and reordering to stickering and shipment. Whether you ship to your warehouse, a prep center or direct to Amazon FBA, you can use RestockPro to determine what to restock and when, create purchase orders, manage shipments, print stickers and labels, and keep a close eye on your inventory at all stages.

Consider using Amazon’s Fulfillment by Amazon program. This will allow Amazon to store and ship your products for you, which can help to reduce the risk of running out of stock.

Make sure you have a good returns policy in place. This way, if a customer is not happy with a product, they can return it without any issue. This will help to keep your customers happy and increase the chances of them doing business with you again.

Finally, Amazon inventory funding works by leveraging the resources of a financing partner to pay for inventory production, which is one of the largest expenses for most product brands. Kickfurther is an online inventory funding marketplace where brands access funding for new inventory (or can get reimbursed for recently produced goods). 

Kickfurther funding goes directly to your manufacturer at the time you place an inventory order, and you make no payments on that inventory until after you begin selling. With your custom payment timeline based on when you start selling, this allows you to order the inventory you need without impeding your ability to maintain financial flexibility while you wait for it to arrive and begin selling.

Interested in learning more about using Amazon inventory funding for your business? Create a business account today at Kickfurther.com to see a funding offer tailored to your business.

Key Differences Between 3PL Providers in the U.S.

Posted on by Kaylyn Perry

Successful order fulfillment operations are key to a product-based business’s success. All order fulfillment services should be timely, cost-effective, and efficient. Companies that don’t have the resources to do so in-house should consider contracting the services of a 3PL provider. We’ll cover what 3PL is and what you can expect from a 3PL provider in this quick guide.

What does 3PL stand for?

3PL stands for “third-party logistics” which refers to order fulfillment via a third-party company acting as a mediator between two groups, in this case the manufacturer and the customer.

Businesses of all sizes often partner with third-party companies to provide services they need.

The term “third-party logistics” or “3PL” has been around since the 1970s and refers to a variety of outsourced logistics services including inventory picking, packing, and shipping.

What is a 3PL provider?

A 3PL provider is a company that provides logistics services such as product procurement and fulfillment to other businesses who contract with them. A third-party logistics company may assist clients with receiving, storing, packing, and shipping products.

Some 3PL providers also offer additional services (known as value added services) such as inventory management, product kitting / customization, returns, and even product assembly.

You may also see a 3PL provider described as a “fulfillment warehouse” or “fulfillment center”.

What are the benefits of 3PL?

The benefits of contracting a 3PL company to assist your product-based business with logistics are many.

Small businesses often struggle to keep up with managing all aspects of their operations in-house and being able to outsource some of these tasks to third-party companies can be extremely beneficial. Companies that may not have the space, the staff, or other resources needed to cover all of the bases when it comes to maintaining product inventory, storage, and shipping should consider using a 3PL provider to handle these services for them.

3PL companies handle all aspects of product shipping and order fulfillment for you, resulting in the best speed and efficiency and freeing up your resources to focus on other business aspects.

Since they are specialized in one area of focus, you get to benefit from the 3PL company’s years of experience and expertise, reducing both shipping costs and delivery times to your customers.

Types of 3PL providers

Before you integrate a 3PL provider into your small business’s operations, you’ll want to consider the different types of 3PL providers.

  • Standard 3PL Providers – These companies provide only the most basic 3PL services such as packing and shipping. Since they only provide minimal services, they are often the lowest-cost option for product-based businesses looking to outsource their order fulfillment. 
  • 3PL Service Developers – 3PL service developers offer value-added services including IT infrastructure and management. This could include shipment tracking and product security. Service developers help ensure the safety and reliability of 3PL operations.
  • 3PL Customer Adapters – 3PL customer adapters handle the entire logistics needs of their clients from start to finish. While they may enhance and improve upon their clients’ existing logistical infrastructure, they do not create their own operation.
  • 3PL Customer Developers – These providers offer the highest level of service to their clients, essentially becoming a company’s logistics department. Like a customer adapter, customer developers take on their clients’ operations. However, there is more innovation and integration at this level of service than with a 3PL customer adapter.

Key differences between 3PL providers in United States

3PL Standard Providers offer the basic level of service to their clients at the lowest price. When you are just getting started, contracting with a standard provider can be a great way to get your feet wet and employ the services of an order fulfillment company. They offer inventory storage, transportation, and distribution for companies of all sizes. These providers may also offer other value-added services beyond logistics such as order returns and customer service.

3PL Service Developers exist to help product-based companies ensure the secure shipment of their products through the addition of value-added services such as product tracking and product security. They take the basic level of services provided by a standard provider and elevate them to the next level. The cost associated with a service developer is higher as well.

3PL Customer Adapters are the next level of service available to product-based businesses. As such, they are more costly than 3PL standard providers or service developers. This type of company handles pretty much all of the logistics services for each of their clients, from the beginning of the shipping process to the very end. As a full-service provider, they essentially adapt your existing logistics operations to be more efficient without entirely taking over and replacing all of the existing infrastructure. Clients may work with the company to oversee the process and step in where needed but remain mostly hands-off.

3PL Customer Developers typically take on a smaller client base of larger companies. This allows them to focus on running the logistics activities of each company individually. Customer developers take over the entire logistics services for each client, which means they are basically considered their logistics department. Contracting a 3PL customer developer is the most expensive option for logistics services since it requires a great deal of personnel, space, and other resources to carry out all of the necessary tasks. They essentially develop each company’s operations to reach maximum efficiency, while clients remain almost entirely hands-off.

No matter which type of provider you select, utilizing the services of a 3PL company can help you grow your business and take your operations to the next level.

How Kickfurther can help grow your business

When you use a 3PL company, your supply chain will look something like this:

  • Your company finds and purchases the products you wish to sell –> Your merchandise ships to the 3PL warehouse who holds your inventory –> You list your available inventory online –> Customer places an order –> Orders are fulfilled from the 3PL warehouse.

With this model, you still have a need for a large influx of capital to purchase your inventory and keep it stocked. This is where an inventory financing company like Kickfurther comes in.

Kickfurther exists to help small businesses grow. The Kickfurther platform gives product-based companies a way to fund the inventory they need without having to have the cash or even the purchase orders upfront. A community of investors provides the capital your business needs, which is then paid back as you receive and fulfill your orders.

Wrapping up

When you need an influx of capital to fund your product-based business’s inventory, consider Kickfurther to cover your expenses. Join more than 800+ inventory financing success stories and get started today with a free business account.