There are only two means of getting products into the country, by ship or by air and demand for these services have skyrocketed. In some cases the cost has increased ten-fold. Getting freight forwarded to stores now involves more complex negotiation and coordination. The challenge in this market is to find a carrier with capacity. Cost is now second in priority.
This is something businesses can’t do themselves. They need to partner with the right freight forwarder to achieve the best outcome. Businesses that don’t may find themselves low or even out of stock for months or longer. This is how bad things are going to get.
While much of the freight forwarding world still operates on old manual systems, Stelno Group invested in leading tech solutions to build real-time live data dashboards and matrices that provide freight carrying visibility including availability, capacity, timing and cost.
Their live systems enable them to view, book in and track freight capacity and transit information. This enables them to ensure they are able to provide clients with the best freight solutions, guaranteeing that their (clients) businesses can operate without interruption.
How to navigate prevalent industry bottlenecks
Here is some word of advice for businesses that import products from overseas.
Diversify product providers
Aim to diversify your product providers across different countries and time zones. This ensures that you are able to source goods at all times should countries be hit with weather or major supply events due to COVID impacted port closures and other issues.
Stock up on inventory
Stock up on inventory. If you have the financial capacity to do so, stock up for 12 to 24 months in advance. This way you are able to lock in your costs upfront and ensure you have stock available and can add more as capacity and costs allow.
Partner with a good freight forwarder
Freight forwarding is an industry that is as old as the hills, but there are a small few that have introduced the most advanced tech to augment capacity and the ability to act with speed, which is a key factor for highly tuned supply chain management.
Do your homework and find a good freight forwarding partner. It will probably save your business over the next 12 – 24 months based on the challenges facing the globe.
Consider different ways to fund inventory
Stocking up on inventory involves a larger cost to the business and one that many businesses had not considered two years ago. Stelno Group opted to fund their operations and growth using invoice financing. It has been a godsend in the grand scheme.
With Earlypay, Stelno group were able to set up the facility in days and start generating a income off our invoices. They didn’t have to deal with banks or take out a line of credit.
They got paid upfront and were able to put the funds into growth. They started with a turnaround of $300k per month, now they are well up over $3m a month. They were able to adjust with ease and used our invoices as collateral rather than having to put up their homes.
Alternative funding options such as invoice financing are ideal solutions for businesses operating in the pandemic as it allows you to deal with supply chain issues easily and quickly.
According to the CEO of Earlypay, Daniel Riley, invoice financing has been around for many years and is increasing in popularity because it is now so easy to set up and use.
“Once the facility has been established, the business simply generates and sends invoices as per normal. We then pay 80% of the value of the invoices to the business upfront so they no longer have to wait for invoices to be paid. Earlypay also look after chasing debtors and managing collections so people in the business can focus on what they’re good at.”
“For businesses that use Xero or MYOB, we integrate with your accounting software to access the invoices so it’s a really simple way for busy business owners to access funding.”
“As a result of increased awareness of invoice financing as a product, the demand for invoice financing is growing fast and the amount we lend to SMEs has doubled in the past year.”
It is ideal for businesses facing supply chain issues that impact cash flow and can be used by businesses in any stage of the lifecycle, from start-ups to large, established businesses.
And because invoice financing relies on the strength of the debtors and invoices instead of the business itself, it is also suitable for businesses that have a short trading history, significant debts or a less than perfect credit history, which is a group often ignored by banks.
“Invoice financing is growing because it offers the flexibility to suit any type of business that sells on credit to other businesses and issues invoices after the goods have been delivered. A big positive is also that it uses outstanding invoices as security and not the owners’ homes.”
“COVID has created an extraordinary and unusual set of trading circumstances for businesses that traditional business loans are not set up to cover and I was delighted to see Stelno Group enjoy such great growth with the assistance of invoice financing,” Riley concluded.
Carlos Villazon is the Managing Director at Stelno Group