Just this week, Crispcap arranged a loan for jewellery business: Lotus Diamond. The family-owned jewellery company has been in Haluk’s (the business owner’s) family for generations and has had a UK presence for over 20 years.

We arranged Haluk a loan amount of £19,000 so he could buy stock in bulk and unlock lower prices on each item.

At Crispcap, we’ve seen countless businesses use commercial finance in this way to save money. Purchasing in large quantities is a preferred method of trade from buyers and manufacturers alike.

Here is why bulk buying can bring about huge savings for SMEs like Lotus Diamond LTD and streamline their operation.

1. Production and Distribution Efficiency

When buyers order in bulk, it can have shockwave affects across manufacturers’ supply chains as their workload and costs can be greatly reduced.

This is because distribution costs have hiked in recent years, so ordering in bulk means there are more product(s) in less packaging with fewer shipping journeys.

This year, E-commerce businesses across the UK are seeing last-mile delivery cost increases of up to 90%, so companies everywhere are seeking ways to reduce distribution prices.

Companies will share savings with customers who buy more product in fewer orders and incentivise them with cheaper rates.

This is great news for SMEs with a steady turnover, as they can utilise these low rates to make savings of their own. Plus, bulk buying reduces packaging demand and CO2 emissions from shipping. This can help businesses meet their environmental quotas.

A business loan can help companies bulk buy, you can apply for funding in 30 seconds here.

2. Inventory

Keeping stock in storage can be expensive for suppliers. In fact, inventory holding costs are usually 20-30% of a business’s total inventory value annually.

Suppliers want their stock sold because the longer it stays in storage, the more it could cost their operation. That’s why they offer discounts on bulk buys, as bigger orders mean there are fewer overhead costs for them.

The issue of storage raises an important point for buyers as well, as ordering in bulk should be done with caution.

SMEs should only buy large quantities of stock if there is high demand from their business, or they have the capacity to store it. Otherwise, businesses can face workspace issues or damage to the products if they’re not kept correctly.

But for the most part, businesses know how much to buy, what they can afford, and how much they can store. So, making the most of a bargain shouldn’t be an issue.

For Haluk at Lotus Diamond LTD, his bank statements and full filed accounts displayed consistent and high turnover. He took a business loan and ordered more jewellery because he knew the products would sell and he’d make a huge saving from bulk buying.

3. Cash Flow Security

A stable cash flow is invaluable to every business, and that is particularly true for suppliers.

When a bulk order is made, a supplier is getting predictable revenue upfront, and that can have a wealth of benefits to their operation.

It means they can plan their supply chain more efficiently and keep the business running when individual orders might be slow. Upfront payment can also be quickly reinvested into the business to drive growth and future earnings.

Suppliers value financial stability, so they will lower their unit prices for bulk orders. In turn, SMEs get discounted rates and can buy more products for a lower cost. Bulk buying supports the cash flow of every business in the supply chain.

Ultimately, Haluk made a bulk purchase on stock to strengthen the business’s cash flow. The savings he’s made will be funnelled back into Lotus Diamond LTD for an expansion into new territories, including London and Wales.

4. Negotiation

With the promise of a high-volume order, SMEs are in a strong position to drive costs down.

SMEs should already get a substantial discount with a bulk buy, but they can still negotiate a lower price. Custom order like this makes up for most business transactions today.

These discounts aren’t guaranteed, but it’s important for small businesses to remember the leverage they have when bulk buying. Plus, suppliers deeply value the stable income from high-volume orders, so it’s certainly worth putting an offer in to see what comes of it.

Haluk at Lotus Diamond followed this practice. After securing an unsecured business loan, he negotiated a lower price per unit of jewellery from his suppliers. They were happy to go ahead with the discounted rate in exchange for the financial security of his order.

Haluk has made a huge saving on the stock and put some aside for the eventual launch of his new stores too.

Why Bulk Buy?

Bulk buying is cost-effective because it’s mutually beneficial for suppliers and buyers.

For suppliers, it offers a stable income that can boost growth and reinvestment. It also allows them to streamline production and distribution for a cheaper and more eco-friendly supply chain.

For buyers like SMEs, it’s the key to unlocking cheaper rates per unit and increasing their profit margins. Bulk buying also helps SMEs meet the demands of their consumers, which will improve customer retention and satisfaction.

Bulk buying has the power to strengthen the cash flow of any business.

Loan For Jewellery Business and Similar SMEs

Whist bulk buying has an enormous wealth of benefits for a SMEs, it requires a large initial investment. This can be difficult for small businesses that need to protect their cashflow but also want long-term savings on their stock.

Business finance can give you an injection of funding to buy the stock you need and save money in the long run. You can apply for a business loan and choose from a variety of loan terms without affecting your credit score. Or use our loan calculator to choose a repayment schedule.