Tackling the liquidity trap in merchant networks

For many corporates, managing cash flow becomes increasingly challenging due to trapped liquidity, a situation where up to 48% of businesses struggle to access the working capital needed to keep operations running smoothly. Much of this stems from the unmet financial needs of merchants within a distribution network, which leads to late or missed payments, disrupted order flows, and reduced revenue streams.

The heart of the issue lies in the disconnect between your financial systems and the ability of merchants to manage their own liquidity effectively. Without tailored financial solutions that address these pain points, merchants face cash flow struggles that hinder their ability to make payments, order products, or meet demand. This, in turn, impacts you, affecting your ability to scale and grow your business effectively.

The corporate impact: Why trapped liquidity is a growing problem

When merchants can't access working capital solutions, their liquidity constraints directly affect your business. Delayed payments, order changes, and reduced sales volumes disrupt the entire sales and distribution process, creating a domino effect that ultimately hinders your company's revenue growth and stability.

As a corporate, your focus on growing revenue and improving operational efficiency is tied to the health of your merchant network. But without addressing these liquidity challenges, you're left with bottlenecks in your supply chain, making it harder to meet demand and expand. Enter embedded finance.

Embedded finance: A strategic tool for corporate growth

Embedded finance offers a powerful solution to these liquidity challenges by integrating financial services directly into your distribution network. By embedding flexible payment terms, financing options, and tailored lending products, corporates can ensure that merchants have access to the capital they need to keep operations running smoothly.

Here's how you can improve liquidity throughout your merchant network using innovative embedded finance solutions:

1. Flexible payment terms
   Offering merchants extended payment terms helps them manage cash flow more effectively, allowing them to make timely payments while keeping your orders flowing consistently.
2. Commercial incentives
   Early payment discounts or volume-based incentives can encourage merchants to meet payment deadlines, improving liquidity and reducing the risk of late payments.
3. Revenue-based lending
   Offer financing options based on a merchant's revenue, giving them the flexibility to access capital as they grow, with repayments tied to future sales. This ensures that merchants have the liquidity needed to maintain operations while aligning with your growth goals.
4. Growth-based lending
   Provide capital based on projected business growth, empowering merchants to take on new opportunities without straining their cash flow. This not only strengthens your relationship with merchants but also ensures a more stable supply chain.

The benefits: Driving growth while solving liquidity issues

Implementing embedded finance solutions directly addresses the liquidity challenges within your network, leading to several key benefits for your business:

• Stronger merchant relationships
  By offering merchants access to financial tools that improve their cash flow, you strengthen long-term partnerships and foster loyalty.
  
  
• More reliable sales channels
  Liquidity issues no longer disrupt your sales flow, ensuring that your products are consistently available and your revenue streams remain stable.
  
  
• Improved operational efficiency
  When merchants can manage their payments and cash flow smoothly, it reduces bottlenecks in your supply chain, making operations more efficient and scalable.

The path to sustainable growth

As corporates continue to navigate complex supply chains and sales distribution channels, addressing merchant liquidity is key to unlocking sustainable growth. Embedded finance provides a strategic, scalable solution to these challenges by empowering your merchant network with the financial tools they need, while also aligning with your company's growth objectives.

By embedding flexible payment terms, lending options, and financing models into your operations, you're not only solving a pressing liquidity issue, you're also building a more resilient, efficient, and growth-focused business environment.

Toqio offers the flexibility, integration, and customization you need to implement embedded finance solutions that meet both your needs and those of your merchants. Explore how our platform can help you unlock growth and optimize your operations.