3 Ways to boost your retail business access to cash flow for Black Friday

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This has been an extraordinarily difficult year for most South African retailers, with sales showing year-on-year declines for five consecutive months up to end-August, according to Stats SA. Many of them are hoping for a bumper Black Friday and festive season to set them back on the path to recovery following the income lost during the more restrictive levels of the COVID-19 lockdown.

The challenge that many face right now is that their cash reserves are depleted after they were forced to shut down or scale back operations during the Level 4 and 5 lockdowns, says Steven Heilbron, CEO of the Connect Group of companies. Some, for instance, liquor stores or shops that rely on tourists have seen even bigger disruptions to normal trade.

“To take advantage of #BlackFriday and the festive season, most retail businesses need access to working capital,” he adds. “Without it, they cannot purchase inventory, take advantage of bulk buys at discounted rates, invest in new service, merchandise or promotional displays or even product lines like a coffee shop in a retail store.” 

The terms and conditions for financing from traditional lenders involve a lot of red tape and the business opportunity can often be lost by the time a loan is eventually approved – if it is even approved at all. There are, however, some innovative ways that retailers can improve their profitability, access cash flow or business financing. Heilbron suggests three of them:

  1. Expand the product and service range

Many retailers are looking to boost profits by introducing new products and services. Selling products like prepaid airtime and data, electricity, bill payments, lottery and gaming top-up vouchers or money transfer services is a popular option because the barriers to entry are low and retailers earn commission from each transaction.

  1. Instant Access to your cash

For some retailers, the problem is not that they don’t have cash on hand, but that they cannot get to it because it’s in transit or still in their cash vault, waiting for a cash-in-transit collection. The ideal automated cash management solutions not only provide robust cash vaults to ensure a safe trading environment but also innovative cash flow options. For a modest fee, a retailer will be able to instantly access their cash, whilst still in their vault. And, with the click of a button, their cash can reflect in their bank account.

  1. Alternative finance from fintechs

Financial technology solutions like Capital Connect are designed to address retailers’ pain points by allowing them to apply for credit right from an app on their smartphone. An unsecured loan can be granted in just 24 hours from application, meaning the retailer can capitalise on golden opportunities and be able to grab that great deal on the product it expects to be a big seller on Black Friday.

Heilbron says: “A recent survey from TransUnion found that 90% of small, micro and medium businesses are struggling because of the pandemic and nearly half are not sure they’ll survive. This festive season will be make-or-break for many retailers. Innovative financing solutions can help them take advantage of this vital promotional period to boost sales and profits over the Black Friday weekend and beyond.”