These challenges have been widely overlooked to date and businesses have been left to cope with these cashflow difficulties themselves, with minimal support made available from banks or other financial services. Zoe Newman, Head of Partnerships at Capital on Tap, explains below.

Fintech enterprises have begun to recognise the need for a solution here and are helping to innovate trade credit through new partnerships and co-branded trade card products. This innovative and automated trade credit solution enables wholesalers to better support their customers by issuing them with co-branded trade cards which provide instant credit with which to fund business purchases.

For many independent retailers, short-term cash flow issues are a familiar experience which will have had a significant impact on their business and impeded their ability to buy goods. Typically for independent retailers or restaurants, this experience often involves a cycle of not being paid by clients and customers and, as such, not being able to afford to purchase goods from wholesalers. Often, when looking for an alternative solution, many will turn to short-term loans, the majority of which have high-interest rates which make them unsustainable economic solutions, with the perils outweighing any perceived benefits. Needless to say, this cycle is detrimental not only to these retailers but also to the independent wholesalers who are reliant on them for business.

For many independent retailers, short-term cash flow issues are a familiar experience which will have had a significant impact on their business and impeded their ability to buy goods.

However, the new partnerships between fintechs and wholesalers are providing a much-needed solution to this problem and offering SMEs access to trade credit for business purchases without the strings of many short-term alternatives. The co-branded cards also give customers a sense of security should they come into any unforeseen costs and doesn’t restrict them to only spending with the wholesale partner.

By partnering with a fintech finance specialist, wholesalers are able to help SMEs access funding which will allow them to grow their organisation and take advantage of business opportunities, while also encouraging more sales with them. This scheme is a far cry from many bank-issued credit cards or short-term loans, as not only does this give their customers more freedom and flexibility, but it also removes some of the costs and burdens associated with the high-interest short-term loans that many will have had to resort to previously.

Through these partnerships, wholesalers are also set to benefit. This is in part due to it increasing their customers’ spending potential with them. Additionally, thanks to the branded nature of the cards issued, customers are reminded of the wholesaler every time they take out their wallet or use the card, providing valuable exposure for the brands.

Ultimately, these partnerships are a welcome development for many SMEs who are finding that banks are not providing sustainable or suitable funding options for their businesses. For many of these businesses, the sums and terms on offer to them do not fit their needs and meeting the strict repayment fees can be difficult due to the peaks and troughs in their trading periods. In addition, it can take several weeks for these businesses to be approved bank-backed funding, while many fintech partnerships guarantee a decision and access to funds within hours or days. It is the hope that this will remove the reliance some businesses have on short-term loans, which have historically allowed instant credit but with high-risk terms and extreme interest rates. As such, many SMEs will see the advent of partnerships between fintechs and independent wholesalers as offering a much-needed solution to these problems.

For many of these businesses, the sums and terms on offer to them do not fit their needs and meeting the strict repayment fees can be difficult due to the peaks and troughs in their trading periods.

At Capital on Tap, we have developed a number of relationships with independent businesses and wholesalers, such as JJ Food Services, to help these businesses overcome many of these issues. The partnerships between fintechs and independent wholesalers are enabling these businesses to inspire increased customer-loyalty and customer satisfaction by recognising a need in their customers and providing a viable solution. The initiative also means that these businesses are no longer just wholesalers, but they are also service providers - adding a new string to their bow.