4 Financial Metrics Wholesale Brands Should Focus On

Let’s say you’re a brand that wants to level up your wholesale operations. There are several areas of your business you need to look at but one of the most important are your financial metrics. 

These metrics are pivotal to your success because they’re what drive your growth and sustainability. 

For today, we’re going to focus on four essential financial indicators that every brand in wholesale wants to monitor closely. 

1. Profit Margin

At the core of any successful business is profitability. 

Profit margin measures the difference between your revenue and expenses. It’s a fundamental rule for any business, your income should exceed your outflow.  

But you should understand that in apparel, specifically, this may be harder said than done due to payment terms that can fluctuate. You may offer a buyer net 30 terms, but there’s always the chance they may ask to extend those terms to 45 or 60 days, which will affect your profit in a given period. 

Regularly analyze your profit margins to make informed decisions and adjust your strategies as needed. 

2. Cash Flow Management

In order to ensure you have a healthy profit margin, you need healthy cash flow. 

Positive cash flow ensures that you have the necessary funds to operate daily and invest in future growth. As mentioned, if you’re offering net 30 payment terms to wholesale buyers, managing cash flow becomes even more crucial. 

Delays in payments can stretch from to north of 75 days, which will hinder your ability to restock inventory or invest in new opportunities. Making sure to work closely with your accounts receivable team will help you maintain a healthy cash flow. 

3. Return on Investment (ROI)

As your brand grows, you'll encounter numerous opportunities to invest in new tools, equipment, or services. Assess the return on investment (ROI) for each of these opportunities to determine which are worth your time and which aren’t. 

Whether you’re considering new software, purchasing a silk screen machine, or leasing additional warehouse space, evaluate how these investments will benefit your business. 

Will they automate processes, reduce manual labor, or improve efficiency? 

Always compare alternatives, such as outsourcing versus in-house solutions, to ensure you're making the most cost-effective decisions.

4. Operating Expense Ratio

Understanding your operating expense ratio helps you determine how much you're spending to run your business relative to your revenue. 

This includes costs associated with product design, marketing, production, and distribution. 

By keeping a close eye on these expenses, you can identify areas where you can streamline operations, automate tasks, or implement user-friendly solutions to reduce costs. Always look for ways to optimize your operating expenses and you’ll see a healthier bottom line.

Monitor these four financial metrics and your brand will be well on its way toward even better wholesale success.   

If you want to see how wholesale software can help your brand improve these metrics, reach out to our team for a 1-on-1 consultation.