Raising finance at different stages of a transaction

When businesses have a working capital or cashflow issue, many businesses use business loans or invoice finance solutions to help alleviate the situation. But what if you need access to capital earlier in the transaction to pay your suppliers?

Stock Finance – this can be used to leverage funding against stock that is already in your warehouse. Typically, it is only suitable for larger facilities where there is stock in excess of £1m. In most cases you can generate 20-30% of the stock value. It needs to be linked with an invoice finance facility and you need a regular stock turn.

Trade Finance – this is an excellent solution if you are importing finished goods against confirmed orders. If your confirmed orders are from a credit worthy buyer, a lender will pay your supplier for the goods against the INCO terms. Once the goods are with you they can be delivered and an invoice can be raised. At this point in your trade cycle the invoice finance facility will kick in and repay the trade finance facility. When your customer pays, the invoice finance facility is repaid and the trade cycle is complete. This is a revolving credit facility that can be used all the time.