All That You Wanted To Know About E-commerce Funding

If you are an e-commerce merchant, you will need money to survive the dog-eat-dog competition in the online domain. 

So, how do you get money? 

The answer is simply through e-comm funding.

Financing can help you solve your working capital issues, which is why there are numerous e-commerce financing options for customers. You just have to know which one suits your needs, and that's that! 

What is the working procedure for e-commerce funding?

So, to start with, whichever financing institution you've chosen to borrow the funds from will provide you with capital. Once you get the money, you can use it to grow your business by fueling your ad campaigns, hiring a skilled workforce, developing products, and more. With the influx of revenue, you must ensure that the repayments to your financier are completed on time (according to the timeline you both agreed upon). 

Once the process begins, a team from the financial institution will conduct a thorough risk analysis to check details like your annual revenue and turnover, cash influx over a given period of time, conduct an analysis of your stock, and more.

Why is automation of critical importance in the e-commerce financing process? 

Automation works smoothly only when all relevant platforms work in concert and there is no communication gap. This includes the financing institution, the e-commerce marketplace, shipping and logistics providers, your e-commerce warehouse, and the end consumer. 

An Application Programming Interface (API) ensures the steady flow of information within the platforms. An API is crucial because the financer gets access to the e-comm marketplace with the help of the API. Now you may ask, why does the financer need access to the e-comm marketplace? The reason is simple: they want to thoroughly check and keep tabs on the online activities of the seller. They go through the sales and revenue, financial records, and more. So, what does automation do? It minimizes the mistakes made by humans in financial record keeping or analyzing the availability of material and so on. As a result, the financer doesn't need to bother the seller every now and then for updates. Automation simplifies the job of tracking everything systematically. 

The power of automation has interconnected all of the systems involved in business management. This is why financers can now credit funds directly to the seller's bank account. However, please note that the financer will only transfer the amount the applicant was granted during the application screening process in the initial stage of e-comm funding. 

E-commerce marketplace platforms are designed to take care of the inventory of goods and the calculation of revenues generated. This means the seller's activity is monitored in terms of inventory, sales achieved, and payments received or to be received. Most e-commerce marketplace platforms generally make repayments on a bi-weekly basis to the sellers. This means that the marketplace makes direct transfers of money into the bank account of the financing company.

Once the seller completely and successfully repays the total amount granted to them, the financial algorithm meticulously goes through the sellers’ overall sales performance to begin the e-comm funding process all over again.

After looking at all the aspects mentioned above, the financial institution will decide whether your application qualifies for approval or not, and they also set credit limits. 

Who is involved in the e-commerce financing process?

The e-commerce financing process is a straightforward one. There are roughly four entities within the process: 

• The seller who applies for financial assistance: you will be eligible to get funds if you have a manufacturing unit, a trading firm, or are a B2B or B2C service provider. 
• Whichever e-commerce marketplace platform you are showcasing your products or services on, such as eBay, Amazon, Etsy, Wish, and more: these e-commerce marketplaces are renowned digital hubs where you exhibit your products/services. 
• The financial institution: the lender will provide you the required capital for the betterment of your business. Your enterprise will gain liquidity when the funds are allocated. 
• The consumer: the customer who buys your product is the final participant involved in this process. They help in revenue generation because they purchase the product or service that the sellers have to offer. 

Conclusion

Today, sellers do not need to run from pillar to post in search of funds. The entire process is automated, starting from the initial fund transfer to the contract renewal; it is that easy! 

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