Supplier price increases are one of those realities no business owner escapes, and often a merchant cash advance is the most practical way to ride out the change. Whether you run a restaurant, a pharmacy, a distribution business, a manufacturing operation, or a growing online brand in South Africa, at some point a supplier will send the email or make the call: costs have gone up, and so have our prices.
When that happens, it’s easy to feel boxed in. Margins are already tight. Customers are price-sensitive. Cash flow is spoken for before it even hits the account. But a supplier increase doesn’t automatically mean trouble. What matters is how you respond.
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First things first: understand the supplier price increase properly
Before reacting, negotiating, or making internal changes, you need clarity. Ask your supplier for detail, not just a percentage.
You’re looking to understand:
- What exactly has increased? Raw materials, shipping, energy, labour, exchange rates?
- Does the increase apply across all products, or only certain lines?
- Is this a permanent adjustment or a temporary surcharge?
- When does it take effect?
A responsible supplier should be able to explain what’s driving the change. This is not about confrontation. It’s about making informed decisions. Once you understand what’s behind the increase, you can assess whether it’s reasonable, negotiable, or something you need to work around.
Related: Four Tips to Help Your Business Survive Ever-Rising Costs
Don’t wait. Have the difficult conversation
Too many businesses quietly absorb increases or silently fume while doing nothing. Neither helps. If you value the relationship, speak to your supplier directly. Be honest about your position. Let them know how the increase affects your margins, pricing, and cash flow.
Ask if there is any wiggle room, not only on price, but on how the increase is implemented.
Ask if there is any wiggle room, not only on price, but on how the increase is implemented.
In many cases, suppliers are willing to discuss:
- Phasing increases in over time
- Holding current pricing for a fixed period
- Improving payment terms
- Offering volume-based incentives
- Reviewing product mix to find more cost-effective alternatives
Long-standing customers often have more leverage than they realise. Suppliers don’t only sell products. They rely on stable, paying clients. The conversation won’t always lead to lower prices. But it often leads to better terms, and better terms can make a real difference to cash flow.
Learn: Supplier Negotiations: 10 Tips for Retailers
Re-run your numbers properly
Once you know what’s changing, you need to see what it actually means for your business.
Sit down with your costs and look at:
- New gross margins
- Impact on your best-selling products
- Which lines are most exposed
- How this affects monthly cash flow
This is where clarity beats guessing. Some increases will be uncomfortable but manageable. Others will force decisions on pricing, product focus, supplier mix, or whether you need fast, flexible business funding. If you don’t fully understand your numbers at this point, you’re guessing, and that’s how small problems become big ones.
Explore: Alternative Business Funding
Decide how much you can absorb, and what must move
Not every increase should immediately be passed on to customers. But not every increase can be absorbed either.
Here are some of your options when there’s a supplier increase:
- Absorb part of the increase to stay competitive
- Pass some costs on where your value justifies it
- Reduce costs elsewhere to protect margin
- Change product focus to higher-margin lines
- Re-negotiate commercial terms to ease pressure
South African customers understand price pressure. What they don’t accept is unexplained price hikes or declining service. If prices need to change, make sure they are introduced with honesty and supported by value, quality, reliability, and consistency. A small increase that keeps your business healthy is better than frozen pricing that quietly breaks it.
Look beyond price: cash flow is often the real issue
In many cases, the biggest problem isn’t the increase itself. It’s timing.
Higher prices mean:
- Larger upfront payments
- More cash tied up in stock
- Slower breathing room between payables and receivables
Even profitable businesses feel strain when supplier costs rise. Stock costs more. Invoices get bigger. Cash gets tighter. This is where many SMEs get caught. They are trading well, but cash flow can’t stretch far enough to support the new reality.
Related: Trends in Cash Flow Management Among SMEs
This is exactly why Merchant Capital exists
Access to fast, flexible working capital allows you to:
- Secure stock at today’s prices
- Settle suppliers without disrupting operations
- Protect your buying power
- Manage transitions without panic
- Keep customers supplied while you adjust
Sometimes the smartest move is not fighting every increase, but funding through it strategically so your business stays stable while you adapt.
Review your supplier base carefully
Price increases are also a prompt to review your wider supply chain. That doesn’t mean burning bridges or starting from scratch. It means doing responsible commercial homework.
What to look at when reviewing your suppliers:
- Alternative suppliers
- Local vs imported options
- Bulk or group buying opportunities
- Long-term contracts vs spot purchasing
Even if you don’t switch, you strengthen your negotiating position when you know your options. This reduces future risk. Supplier concentration is comfortable when times are good. It’s dangerous when markets shift. Building options into your supply chain strengthens your business.
Use this moment to build resilience
Supplier price increases will happen again. Inflation, fuel costs, energy pressures, logistics disruption, and global market shifts are not going away. Each increase is an opportunity to improve how your business handles pressure.
How to use supplier price increases to build resilience:
- Tighter cost control
- Better stock planning
- Stronger supplier communication
- Healthier cash buffers
- More flexible funding access
Businesses that grow sustainably are not the ones that avoid challenges. They are the ones that design themselves to absorb them.
Get a financial buffer to carry you during supplier price increases
If your supplier has raised prices, it doesn’t mean your business is failing. It means you are operating in the real economy.
The businesses that survive and grow are not those who hope conditions improve. They are the ones who respond clearly, act early, and put the right financial tools in place.
Whether you need working capital to secure stock, smooth cash flow, protect buying power, or create space to renegotiate and restructure, Merchant Capital provides fast, flexible, asset-free funding designed specifically for South African businesses.
Because when costs rise, your momentum shouldn’t disappear.
Talk to an expert at Merchant Capital and access a cash advance within 24 hours.
