Just as any other business, online sellers have to stay on top of their expenses, pay taxes, manage inventory and so much more, all while trying to grow their business and succeed in today’s competitive eCommerce market. But how can you manage all of the above if you don’t have enough cash on hand? Well, with the help of working capital, you can easily cover tax payments, purchase additional inventory, pay for advertising and more and scatter these payments over the course of a few months.
Guestpost - PayoneerLast Updated on 19 February 2021
Pay & Manage Tax Bills
As an eCommerce business in the UK, you are obliged to pay corporation tax, which is the tax on the profits made by your business over the financial year and runs from April 6th one year to April 5th the following year.
Aside from corporation tax, you will also have to consider the Value-Added Tax (VAT). VAT is a consumption tax that is assessed on all goods and services sold within the EU.
Note: As of January 1st 2021, the UK is no longer part of the European Union, which means that the UK is now seen as a third country when it comes to online selling and UK sellers can no longer benefit from the EU VAT regime, the single market and the customs union. This means import VAT has to be paid when selling from the EU into the UK and the goods arrive in the United Kingdom. For this VAT registrations are necessary, and VAT has to be paid on site. The more countries you are having VAT duties in, the more VAT returns have to be filed and the more VAT payments have to be made.
To be prepared and stay on top of your expenses, it’s best to always reserve the amount needed for these VAT payments with a cash advance. You’ll be able to reserve the cash needed to pay every quarter without having to scramble for ways to pay for it.
When taxes arrive at an inconvenient time (and they surely do), working capital can help ease the pain of unpredicted payments in case you’re unable to pay them all at once. Whether your tax bills are large or small, working capital can help you spread payments over the course of several months, allowing you to continue on with other business operations and without having the worry of how to pay these bills on the spot.
Furthermore, working capital can also help you with other day-to-day tasks like inventory orders and advertising costs.
Purchase More Inventory
As an eCommerce seller, ordering inventory can be quite the challenge. Unless you’re drop-shipping, you’ll need to purchase your inventory in order to sell products and if you don’t have enough cash on hand, this could really put your business at risk.
According to a recent study, 82% of small businesses fail due to poor cash flow management and lack of cash. Here’s why you should always have enough inventory in stock and how working capital can help you pay for it.
As mentioned before, if you don’t have the cash to pay for more inventory, your eCommerce business will be faced with numerous challenges, such as a lack of inventory which can then lead to additional obstacles. For example, if you want to stay afloat and keep up with the tight competition and sell more than others on marketplaces, you’ll need a substantial amount of inventory to really succeed. The more inventory you order, the more marketplaces you’ll be able to sell on. However, without enough cash, you won’t be able to pay suppliers or even purchase inventory at special prices.
But all is not lost. With working capital, you’ll be able to better manage your inventory and avoid the risk of damaging your Amazon ranking, ultimately helping you sell more to a wider audience.
Boost Amazon Advertising for Greater Visibility
Advertising costs can come with a headache but working capital can help relieve that by allowing you to allocate more budget towards advertising and marketing efforts.
With over 500 million products sold just on Amazon.com alone, it’s no surprise if you don’t find that your products are not in front of your customer’s eyes enough. Competition is tight and if your store doesn’t appear on the first few pages of search results, customers may never discover your items, leading to a loss in sales.
Are you selling a tangible product on Amazon? If yes, then why aren’t you advertising on Amazon to get more eyes on your products? With Amazon Sponsored Ads (Sponsored Products, Sponsored Brands and Sponsored Display) you can run ads on both search results and product pages. And with working capital, you’ll be able to pay for those advertising costs that will ultimately help you reach more visibility.
How Payoneer Can Help
To help solve costly business operations and manage your tax payments, Payoneer, a leading cross-border payments platform, is offering hellotax customers like you a new approach to easing your cash flow with our Capital Advance program.
Capital Advance can help you grow your business by enabling you to receive extra working capital funds in minutes. As mentioned earlier, you can use these funds to pay your tax bills, increase and purchase more inventory before peak seasons, expand into new products and markets and much more. This working capital solution can essentially give your business the extra boost it needs with up to $750K instantly along with a convenient gradual settlement plan, leaving enough funds to manage daily expenses.
As a hellotax customer, you’ll be able to accept a Capital Advance Express offer and if eligible, you’ll get access to Payoneer’s top-tier Grow offers, which are large cash injections for your business.
So, if you are looking to grow your eCommerce business, click here to learn more about working capital.