Financing Capital Equipment

Summary

An existing recycling company (paper based waste) was stagnant in growth and had a heavy labour content.  An apparent need to upgrade its processing equipment to reduce costs, increase profitability and grow to win new business.

Challenges Faced

The company sourced and agreed terms from a European based manufacturer for a bespoke processing line.  To secure the build and payments for the processing line the manufacturer wanted payment in stages throughout the build process (made against milestones) and in full prior to delivering the line.  There was appetite from an asset finance funder to fund the line but only once commissioned at a site in the UK.  This created a deep working capital need upfront that the company could not afford at the time.  The value of the processing line was £875k.

Our Solution – Mitigating Risks of Trade & Managing and Raising Working Capital

Firstly we worked with the manufacturer and the recycling company to ensure the stage payments were met at key milestone pertinent to the recycling company and they signed off each stage prior to payment and thus, control quality and suitability was checked at each stage reducing any potential delays.

We then tailored a solution that met the upfront stage payments that needed to be made to the supplier which was ultimately exited by the asset finance solution.

The Value Created

The solution not only provided the working capital needed to fund the processing line, which could not have been met through day to day working capital or the principles having to inject further cash into the business, but to also work with the manufacturer to mitigate the potential goods and quality risks.

The line was installed which reduced production costs at the recycler considerably whilst they were also able to redeploy the labour previously used to increase the scope of services they offered and win new business.  Total Facility £450k.

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