What is Ecommerce financing?
Ecommerce financing is a simple funding solution that can provide working capital to eCommerce businesses. Some of the solutions that an eCommerce business might need are micro-loans, lines of credit, etc.
The worldwide pandemic situation is wreaking havoc for millions of people and their livelihoods. In fact, small businesses and online eCommerce stores are no exception to this situation. People are afraid to spend money as they are uncertain about the upcoming situation, and it is making a direct impact on the cash flow of the eCommerce stores online. This raises the need to manage your finances for eCommerce businesses in a healthy manner to stay afloat.
How can you manage your business finance efficiently?
Since an eCommerce business is highly competitive and unpredictable, so are the finances of such businesses that fluctuate often. But don't lose heart. Here are some best tips that can help you in handling your eCommerce financing effectively:
Keep your finance updated
Practice bookkeeping and keep your business accounts updated at all times. With all the financial details handy, it becomes easy to analyze the financial statements and calculate the liquidity, profitability, and efficiency ratios.
Manage short term cash requirements wisely
Often, a business requires short-term cash for its smooth operations. But there can be scenarios when you might fall short of such working capital. If you ever face such a cash crunch, opt for several lending partners offering short-term credits or loans but only after the critical evaluation.
Automate regular payments
Make sure to automate all your regular business payments to work in a stress-free environment. These can be your invoices, expenses, bills, and receipts that must be taken care of.
Run promotional campaigns to increase cash flow
You can also increase your cash flows with various promotional campaigns. Offer exclusive discounts for new sign-ups or cash-backs on purchases to lure the customers into purchasing from your online store.
Increase average order value for your business
Use a simple tactic of offering free shipping at a minimum shopping value. For instance, if customers buy products worth $75, offer them free shipping at $100 cart value. Most of the customers will take the plunge.
Track your earnings
Regularly keep track of your sales and expenses so that you have a clear picture of your earnings at the end of a day. After that, if you find any weak seasons or products that are not selling well, you can make smart decisions on what action to take next.
Get hold of an accounting software
For any business to manage its cash flow well, it is vital to perform financial reporting. Therefore, invest in good yet cost-effective accounting software for financial reporting that offers visual presentation reports.
Calculate the cost of products sold
The cost of products sold includes the manufacturing and shipping costs. It also consists of the costs incurred for packaging the products, storing them and the wages you paid your employees. With an explicit calculation of the cost of products sold, you will have a better cash flow for your business.
Calculate additional expenses
Running an online business can incur many additional expenses that you often don’t consider as expenses. But you also need to calculate those expenses, such as warehouse rent, wages, and of course, the coffee and the snacks. You need to align all the money that goes out and comes into the business.
Break-even sales requirement
Break-even sales are the revenue that you earn from your business without any profit. But this sales amount covers all the expenses of your business. So, this value will explain precisely what sales are necessary every month to avoid incurring losses in any year.
Conclusion
It is worthy of keeping your business finance calculations at your fingertips. As when you’re aware of your business finance back and forth, it becomes easy for you to manage the finances well. Moreover, staying on top with your managed business finance can keep your business away from any unforeseen debts.
Qashflo helps marketplace merchants to receive the payment of their sales in the only day, without waiting for weeks.
