£3m Invoice Discounting Facility for a Manufacturer of Bed Frames
The facility released £2m additional funding and reduced funding costs by over £80,000.
The client had been funded by the invoice finance arm of their bank for 8 years, having joined the bank as a start-up in 2004. The business has grown steadily, year-on-year and has a turnover of £13m.
We were able to offer a significant reduction in pricing against their existing finance package but the problem was also the structure of the facility.
The way the facility was structured meant there was a lack of funding available on their top debtor, which had been a phoenix business 5 years before. Due to this, the debtor was forced to fund their purchases via Letters of Credit from their own bankers, who limited them to 30 day credit terms with our client & charged them huge fees for the privilege.
Recently, the debtor, a now-large retailer, had started to use their now-substantial weight, with our client, and told them that they would have to either provide 60 day terms & source their own funding to accommodate this, or cover the cost of the L/C’s (c£80k p.a.), if they wanted to continue to supply them.
Fortunately, we were able to secure a credit insured limit on the debtor meaning that funding could in fact be released. In reallity the cost saving to the client because of this is even greater.
Our new facility will release a huge additional amount of cash (up to c£2M more) to the client, will support them in growing the business & reduce the admin burden for the client, who is now confident that they are with a funder who will be able to support them for the foreseeable future.
With our help the client has achieved:
– a significant cost saving
– a significant increase in cash and liquidity
– a significant reduction in administration
– a future proof facility to help them meet their goals
A Great Example of How We Work
This is a great example of how we work with clients and what we are able to achieve. Our aim is always to help clients meet their objectives. We listen, understand and deliver real solutions, real benefits and real savings.
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