A niche engineering company with over 50 years of trading history recently underwent a management buy in. The company manufacturer’s filers for commercial use together with maintenance contracts and spares. Export orders were sourced from the Middle East and South America and payment was made under a Letter of Credit.
These orders required the need for upfront working capital to source the raw materials, components and production costs prior to buyers sign off and payment under the Letter of Credit. The incumbent funder had limited appetite support that did not meet orders profile and limited growth.
Our Solution – Managing and Raising Working Capital
Having understood the ‘lumpy’ nature of the cash flow and key timing of working capital need, we worked with the existing funder to understand and agree a greater level in Pre Export Facility from £500k to £850k. Any additional working capital required was supported by a third party specialist Trade Finance funder who provided the additional working capital facility. Total additional working capital facilities of £600k against orders.
The Value Created
The company was able to meet the orders it had worked hard to procure and increase profitability and scale whilst having confidence when tendering for new sales. This also opened up new sales and growth opportunities for the company. The existing lender has gained further comfort and going forward there are now further options for funding growth.
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