Flexible Financing: The Competitive Advantage
What do you do to finance that once-in-a-lifetime order? Where do you access the cash to exploit sales opportunities? What can give you an advantage over your competitors?
It’s not always reputation, experience, or even entrepreneurial drive that determines why one business thrives while others struggle. Ultimately, it may simply be that one company has access to cash and another does not.
When a business needs access to cash to finance growth, fill orders, or even pay rising day-to-day costs, traditional bank loans are the first port of call.
However, the flexibility or speed of decision that a modern business requires cannot always be offered by a traditional lender. In the dynamic world of modern business, there is no time to wait for the gears of a bank’s decision-making process to change. A company with the ability to make decisions without having to worry about whether the cash is available to back them has a clear competitive advantage.
There are many different financing options available to businesses in addition to traditional loan products. Identifying where the most value in a business lies and then knowing how best to unlock it is key to gaining this advantage.
Initial working capital solutions include:
1. Purchase Order Financing: direct payments to suppliers against purchase orders for goods worldwide, covering up to 100% of the purchase price plus customs duties and logistics.
2. Letters of credit – Payment guarantees that cover up to 100% of the purchase price from suppliers, subject to compliance with delivery and other conditions.
3. Stock Loans – Free up valuable working capital locked up in your warehouse up to 100% of stock value.
4. Supply Chain Financing: Facilities to finance up to 100% of a trading company’s purchases from suppliers worldwide, structured as supplier payments or reverse factoring processed through a proprietary online platform.
Back-end working capital solutions include:
1. Invoice Financing Facilities – These are revolving facilities that finance up to 90% of the value of your invoice by freeing up cash tied up in your sales ledger and all ongoing sales. Facilities can be disclosed or confidential.
2. Asset-Based Lending Facilities: Facilities release up to 70% of the cost value of continuously stored inventory. These are designed to complement invoice financing facilities to maximize the amount of working capital that can be provided.
3. Asset Refinancing Lines: A stand-alone, unique line designed to provide additional working capital by releasing cash against plant and machinery. This is an option for quick release of funds that advances up to 80% of the asset’s value, whether the asset is wholly owned or currently under an existing financing agreement.
4. Sale and HP Back – With this product, the lender buys the asset at an agreed value and finances it for a fixed period with repayments that match the income stream generated by the asset.
Considering the range of financing options available and exploring the wide range of lenders outside of traditional banks is key to obtaining the best value financing that suits a business’s unique needs.
