The Essence Obtaining Lines of Credit From Lenders
High-volume sellers on Amazon need immediate access to sufficient cash flow for a multitude of reasons. If you're short on cash, and the returns are greater than the interest payments, than getting a line of credit from a lender may have its appeal as well. However, there are inherent risks with lines of credit that high-volume Amazon sellers should be aware of. But the prospects of scaling the business without access to adequate finances can seem daunting, even for sellers who have always used cash to make large purchases.
Assessing Lines of Credit
If there are cash flow issues, FBA rules change, listings are suppressed or removed, or the account is suspended by Amazon for any length of time, sellers committed to lines of credit with suppliers could eventually find themselves in serious trouble. Sellers may benefit from reviewing the cycle time of their money down to the day before deciding to expand the business with a line of credit. Sellers can designate the line of credit to their most stable ASINs by analyzing the cycle starting when the product is paid for, featured on Amazon and ultimately sold to the customer.
One of the worst things that can happen to a high-volume Amazon seller is not having access to an adequate amount of cash. Sellers without adequate cash flow will have a hard time sustaining a profit in Amazon's competitive marketplace and making LOC interest payments on time. Sellers who need assistance with cash flow issues may benefit from looking into resources like AmazonLending, OnDeck, LendingClub, payability.com and Kabbage. High-volume sellers without access to enough cash are bound to miss out on fruitful opportunities.
Opportunities with Enough Cash Flow
A wholesaler's ability to take advantage of a manufacturer's impromptu close-out offer may provide opportunities to expand in other ways as well. Without a cash reserve on hand, high-volume sellers are more likely to fall behind their direct competitors. High-volume sellers without adequate cash flow won't even bother reading emails with close-out offers. However, the potential profits to be made from these types of offers may outweigh the risk of getting a loan to cover buying a large number of units.
Cash Flow and Close-outs
Sellers need to have access to cash so they can take advantage of the increasing number of opportunities they're offered as the business grows. Leading brands with surplus inventory send out close-out offers to sellers all the time. Sellers who put themselves in the position to take advantage close-out offers when they are present may have the opportunity to double or triple the profit margin realized by their chief competitors.
Sellers faced with rapidly increasing orders and lengthy payment terms may find themselves in a bind where growth is slowed, credit is limited and sales suffer because there is not enough cash available during the interim. Because high-volume sellers cannot always afford to gather enough cash for the next opportunity or obligation, there are a number of third-party payment solutions available that offer high-volume sellers immediate access to cash on-demand.