A furniture manufacturer with a high growth cash generative business which has been operating for almost 5 years was importing in goods from several key suppliers based in China. Order book was growing and good relations with incumbent bank for working capital appetite.
Company was using Letters of Credits and whilst these worked at the outset of the supplier relationship the volume and process together with the costs made it an expensive operating model. Supplier still wanted payment surety. Expertise and knowledge from within the company and advisors was lacking.
Our Solution – International Trade and Finance Solutions
Having grasped the key drivers at an early stage we engaged the suppliers and discussed their needs and opportunities to better the go forward trading profile. We worked with them and the incumbent bank to structure and Standby Letter of Credit that acted as a payment g/tee to the supplier’s whilst allowing the company to trade on open account format and reduce costs and admin process’s.
The Value Created
We maintained import control through a collection process for quality and payment at a fraction of the cost or administration. Having this facility in place allowed the supplier to provide better payment terms which in turn had a positive cash flow impact on the company.
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