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UnLocking the Financial Prescription for Pharmacies

cashflow,finance 06.07.20

2020 has been a tumultuous year for Australian retail businesses, including pharmacies. It started with sales of masks rocketing in response to nationwide bushfires, following which the country was hit by COVID-19 and hand sanitiser, gloves and toilet paper rolls began flying off the shelves as well.

By the end of March, over 12 million Australians[1], that’s 57% of the population, were visiting a chemist at least once a month. With all this talk of sales, you’d be forgiven for thinking 2020 has been a great year for pharmacies, but with social distancing measures, enforced lockdowns and the resultant impacts on supply chains and consumer spending, the industry has suffered greatly.

More generally, 60%[2] of all Australian companies, including pharmacies, have reported that they have been affected by COVID-19 and associated restrictions, with 81% of these being small businesses. The hardest hit state is South Australia where over two thirds (68%) of all companies have suffered, followed by NSW (65%) and VIC (64%). Small businesses, such as independent pharmacies, have taken the brunt of the damage with 81% saying they have been affected.

As restrictions are rolled back, maintaining healthy finances will be key to adapting with immediate changes in customer needs, as well as longer term shifts such as the aging population and rise of technology.  One tactic all pharmacy businesses need to ensure is a good cash flow. A good cashflow can be facilitated by buy-now-pay-later payment options with suppliers. Services like UnLock for example, can open up lines of credit for 30, 60 and up to 90 days for as little as 1.50% interest to help owners and operators continue business as normal and look at future growth. Below we look at some of the benefits these services can provide for pharmacies.

Increased buying power

The pharmacy industry is dominated by a few big players who operate with such large buying powers that they can negotiate prices and deals that smaller businesses simply can’t match. By opening up a line of credit via a B2B payment gateway like UnLock, smaller businesses can boost their purchasing power with more working capital.

Additionally, paying suppliers upfront will give them more reason to provide favorable prices and with UnLock’s 0% start up fees and interest rates starting at just 1.50%, this option costs less than a merchant fee.

Ability to diversify stock

Currently, general retail accounts for 21% of pharmacy sales and is seen as a way to increase the number of purchases per visit, creating a greater opportunity to generate revenue. The ability to agree to extended payments allows owners and operators time to trial and sell new stock items before having to pay for them. This is particularly useful when meeting changing needs of an aging population and a shift toward medications related to elective and non-essential treatments, which many anticipate will begin to rise again as people return to medical professional’s post COVID-19.

Funding business growth

Another changing consumer need that has become more evident than ever during COVID-19 is the need for online services in the health industry. For pharmacies this could take any number of forms, while still providing a point of collection for medications. However owners and operators choose to address this trend, the ability to extend credit with service providers such as website developers, shop fitters and marketing agencies, can help maintain cash flow as the business develops its digital and bricks and mortar offerings.

Preparation for the unexpected

It’s safe to say that while many businesses may have crisis contingencies, most would never have envisaged the scale and extent of economic and health repercussions of COVID-19. One of the biggest lessons that all pharmacy owners and operators should take from these events is to plan for the unexpected and know where to get help to keep their business viable while riding out the storm.

For more information, visit unlockb2b.com or email UnLock at assistance@unlockb2b.com or call 1300 307 136.

[1] Roy Morgan Data – High satisfaction ratings for chemists and pharmacies as Australia faced bushfires and then the COVID-19 pandemic – http://www.roymorgan.com/findings/8440-chemists-pharmacies-june-2020-202006150612

[2] Roy Morgan Data – Over 60% of Australian businesses affected by COVID-19 coronavirus – up 15% in mid-February – http://www.roymorgan.com/findings/8328-impact-of-coronavirus-march-2020-202003160441

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