Fruit and Vegetable Importer
We were approached by an importer who was finding a factoring facility with his bank restrictive. He was not receiving the 80% prepayment that he had been promised due to other restrictions the bank were placing on the facility. These restrictions were hampering growth but were also putting the very survival of the business under threat. In short the facility was badly structured and had not been fully explained from the outset.
When we looked at the facility it was obvious that by changing to a lender with different criteria a substantial amount of cash could be released in to the business. Due to the business importing the fruit and vegetables against confirmed orders we were also able to offer a trade finance facility that would pay the suppliers by way of letter of credit. This provided even more working capital to the business. This combination of invoice factoring and trade finance, often referred to as trade cycle finance or import finance, is a great solution for importers. The business was able to grow and prosper with a well structured facility from a lender that understood their sector and remains supportive.
What any business should take from this case study is that an invoice factoring facility from different lenders can be a very different proposition. This is because the different lenders have different structures, capabilities and requirements. Choosing the right or wrong invoice factoring company really can mean the difference between business success or business failure.