How Does E-commerce Financing Work?

Ecommerce financing is a funding solution that provides working capital for web-based companies. Companies use eCommerce financing to stabilize the cash flow and to cope with payment obligations, including, staff's wages, tax, and utility bills. E-Commerce financing is also used to make investments.

Who is involved in eCommerce financing?

There are four parts involved in the process of e-commerce financing,

1. The Seller

Also known as the supplier. The seller is usually the applicant requesting to access the Financing Service.

2. The E-Commerce Marketplace Platform

Any worldwide and well-known digital platform

3. The Financing Platform

The financial institution. Its role is to provide liquidity by providing funds to the seller.

4. The End Consumer

Also known as the buyer. The buyer purchases products from the seller through the e-commerce marketplace platform.

How does eCommerce financing work?

The financing company provides capital to the seller. The seller pays back the lender or lending company every 15 days using the revenues from the sales on the e-commerce platform.

A credit team assesses the feasibility of the application, to perform a thorough risk analysis. It analyses qualitative and quantitive variables when assessing the financing needs.

Automation of eCommerce financing

The automation of eCommerce financing relies on the constant communication of the platforms. An API is set up to guarantee direct and open communication. The financing company accesses the e-commerce marketplace platform through the API. This allows the finance provider to monitor the seller's activities. Automation mitigates the risk of human error and minimizing the interaction with the seller.

How to apply For eCommerce Financing?

​1. Your company must be registered and must have a business for at least 12 months with a good credit history. It must sell products through an eCommerce marketplace platform.

2. The online process works as follows:

a) Register your company on the finance providers platform

b) Submit your details digitally for verification.

c) Once your details are verified, the eCommerce financing company grants you a credit line

d) The API is set-up between the e-Commerce marketplace platform and the financing company