SITUATION

A small UK consumer business was faced with rapidly increasing demands for its products and a need to massively increase their stock-holding to fulfill orders. With limited balance sheet capacity, the company wished to find alternative ways of raising working capital to finance its expansion.

CHALLENGE

The owners of the business valued their existing banking relationship but recognised that the bank had reached the limits of what they could provide on a debenture basis. They also wanted to avoid bringing in new equity and nor did they want to provide personal guarantees.

In addition, the business was in the process of moving to purchase directly from Chinese suppliers away from European distributors. This would have a very positive effect on profit margins but would result in longer manufacturing and delivery lead times and tighter credit terms from the Chinese suppliers, thereby exacerbating their cash flow pressures.

HOW WE HELPED

Trade Advisory Network mapped the existing and future buying patterns of the client, together with their sales patterns as part of a Trade Cycle Analysis. From this we were able to clearly demonstrate to the client and to possible alternative funders where the funding gaps would be in the business.

We were then able to work with several specialist payables financiers in the UK, Europe and China resulting in an additional £1.4m of working capital facilities being raised. Their bank took a positive view of what they recognised as a strengthening of their client’s business and feeling that the client was now a much better credit, also increased their bank lines by a further 30%.

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