Retail and e-commerce

Funding to stock up before the season, not after it

Retail pays for stock first and gets paid when it sells. That gap is widest before the last quarter, or whichever season carries your year. An advance can fill it, if the sales that follow can carry a regular payment. Here is how to test that, with the cost in dollars.

merchant cash advance for retail and e-commerce

Check your fit

Approval is never guaranteed. A funding partner makes the final decision.

What owners use funding for

A larger stock order ahead of the last quarter, or whichever season carries your year
A bulk or pre-season purchase where the supplier offers a volume discount
Ad spend for a launch or a sale, in the weeks before the sales arrive
A store fit-out, new shelving or a point-of-sale upgrade
Packing, shipping or warehouse equipment so orders can leave faster in the rush

How money moves

Stock is bought ahead of demand. Suppliers want payment months before the season, and the cash only comes back as shoppers buy. The bigger the season, the bigger the gap in the months before it.A fixed payment suits steady store and online deposits, and suits less a business that earns most of its year in a few weeks. How a merchant cash advance works

Does an advance fit?

It may fit when

The stock has a record of selling, and you know roughly how fast and at what margin
Deposits are steady and your payouts arrive on a regular schedule
The need is a specific order with a date attached, such as a seasonal purchase
A supplier's volume discount is larger than the cost of funds, and you have compared the two in dollars

It may not fit when

You are buying a product line you have not sold before and have no sales to test it against
Most sales sit with a platform that pays out rarely or holds funds, so your deposits are irregular
Your margins are thin enough that the cost of funds takes most of what the stock earns
The money would mainly cover ad spend that has not yet produced sales

A worked example

Stock for the fall and holiday season

A shop with an online store orders stock ahead of the fall. The advance arrives before the goods do, and repayment is a fixed daily payment as the season's sales come in. The slow day below is a quiet weekday in the weeks before the rush, when the stock is paid for and little of it has sold.

That is a noticeable share of a slow day. It stays the same however the day goes, so know your quietest week before you sign.

Sales here mean deposits to your bank account. If a marketplace pays out weekly, several days of sales arrive together while the payment comes out every day. Returns after the season reduce deposits further.

The factor rate and term are assumptions for the example, not a price for this kind of business. It assumes a fixed daily payment and no funding partner fee. A real offer may include fees. Illustrative only. Real offers, fees and payment terms vary by funding partner.

Try your own numbers

Common questions

Can an advance be repaid from my card sales?

Sometimes. A holdback is a share of daily card sales, and it needs card sales that flow through a processor the funding partner can work with. If your sales run through a marketplace or an online checkout, a fixed daily or weekly debit from your bank account is more likely. Ask which one the offer uses.

Do you count marketplace and online store sales?

Funding partners usually look at what is deposited to your business account, so payouts from a marketplace or processor show up in your statements. Send statements for the account that receives them, and tell us how often the payouts arrive.

Should I use an advance or my supplier's payment terms?

Compare the two in dollars. If a supplier gives a discount for paying early or in bulk, set it against the cost of funds. Supplier terms or a bank line of credit may cost less if you qualify and have time, and we will say so if that looks like the better path.

Keep reading

How it works Cost calculator

Other industries

General information only, not financial or legal advice. Approval is never guaranteed. A funding partner makes the final decision. Terms and eligibility vary by funding partner.

Know the cost. Then grow.

Tell us about your business in about two minutes. We will tell you whether an advance looks like a fit, and show the cost in dollars before you decide.

Check your fit

Approval is never guaranteed. A funding partner makes the final decision.