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Stocking Finance explained

Tuesday, November 2nd, 2010

There are a number of variety of stocking finance options and depending on your particular circumstances there are a number of different products. Depending upon the the finance company you approach these different products may be called something completely different from one finance company to another.

Firstly let me explain we are unaware of any financial institution that offers stocking on a stand alone basis. It is usually provided with another finance product.

The most common form of stocking finance is provided on the back of a factoring or invoice discounting facility. A true stocking facility will provided a a percentage of the total monthly stock on a rolling contract. Beware certain invoice finance companies offer stocking finance but t is only to provide additional security to enable them 10% of your debtor book. Whilst funding in this instance  is technically stocking finance the over payment will be reduced over a period of time. There are only a few invoice finance companies that offer the full rolling stock facility and therefore it is worth giving us a call to check.

Stock finance may also be provided as part of a trade finance agreement. Where a business has confirmed orders it may be possible to obtain 100% funding from start to finish. This can either be on a domestic basis or on an international basis. An international trade finance facility will enable a business to import goods and where there are confirmed orders finance can be obtained from start to finish. When the goods are delivered to your customers premises a factoring or invoice finance facility will dovetail with the trade finance facility and provide seamless funding. Therefore technically speak international trade and domestic trade finance could be viewed as stocking finance as well

International Trade Finance Explained

Friday, May 14th, 2010

There are a  number of ways that specialist trade finance companies can help your business. In many cases a complete funding solution is available which might not be available from the banks. A business that has a requirement to import goods maybe able to obtain funding providing that they have confirmed orders for their goods.

For example if a wholesaler is importing televisions but doesn’t have the cash to buy the televisions from the foreign supplier and provided the wholesaler has orders for the TVs in the UK a complete funding package will be available. An import facility is provided for the wholesaler to import the TVs. As soon as they hit the UK and are dlivered to the end customer an invoice is raised as per usual providing however many days credit. The wholesaler will then factor that invoice with the same finance company to repay the trade element of the facility providing a dovetailed finance solution.

This is slightly different from how the banks work that don’t look to be repaid from a factoring or invoice discounting facility but from the sale of the goods at some point in the future. The banks way of doing things is slightly more risky and as such they will look to support business that are only profitable, with a strong trading history and a proven track record.

The dovetailed solution poses a less of a risk to a finance company as they keep control of the transaction from start to finish. Although these facilities may be more expensive than a bank they enable businesses that have no track record or are even new starts or have very little cash to obtain import finance.

lnternational Trade Finance

Sunday, April 11th, 2010

Most businesses will go to their banks to organise international trade finance facilities  which is great if you are a profitable business, have a very strong balance sheet and also have  plenty of security to offer. One high street bank is very strong at international trade finance. No prises for guessing but feel free to give us a call if you are stuck. So what happens if you are not strong enough to organise funding via the high street to help you purchase of buy imported goods. Thankfully there are one or two options available to help the less profitable and established businesses.

Firstly there a one or two specialist factoring and invoice discounting companies that provided you have a buyer for your imported goods will provide a trade facility for you to import. They lend you the cash against the goods and as soon as they hit the UK and are delivered to your end user either the customer pays for the cash immediately or the trade facility is repaid from a factoring or invoice discounting facility that will repay the trade facility. Simple provided the margin is good and the goods are non perishable this kind of trade finance shouldn’t be an issue

Secondly there are one or two independent financiers that under the right circumstances will provide letters of credit without the onerous security that the banks require. The facility works in exactly the same way as above that the trade facility of letter of credit is repaid from the sale of the goods to your end user or customer. Again this can be by cash on delivery or provision of factoring or invoice discounting facility on the raising of the invoice.

XL Business finance has over 10 years experience in helping business with innovative finance solutions which might not necessarily be available fro the high street banks and finance companies.

Financing Imported Goods

Friday, March 19th, 2010

Many businesses are seeking finance to enable them to import goods from foreign countries. Providing that the goods have been pre sold in this country it may be possible to get funding from start to finish by way of an international trade finance facility dove tailing against a factoring or invoice discounting facility.

Many of the high street banks will provide funding enabling business to import goods however many banks will provide a line of credit against the strength of the business in terms of profitability, strength of the balance sheet and the length of time the business has been trading. You must also bank with that particular banking institution and more often than not security such as charges against property etc is often required. Therefore as with most high street banks they can only provide funding for the customers with the best possible credit score.

This leaves a big gap in the market for businesses unable to obtain funding from the banks. Thankfully there are a number of independent based finance companies that are able to provide funding against the strength of your orders and documentation. Therefore funding is potentially available for new start businesses, companies that have declined by their banks or businesses with less than positive trading performances. Providing there is value in the goods that you are buying a trade facility will be provided for you to import your widgets etc and providing the goods have been presold a factoring o  invoice discounting facility will dove tail and be used to repay the trade facility on delivery of your goods to your customer. Simple! Well in theory it is

 
 
 

XL Business Finance Ltd is a privately owned and independent business financing company with established links to many of the UK's leading finance houses. XL Business Finance provides a viable alternative to high street banks that lack the flexibility and imagination to provide a solution to most business users requirements. XL Business Finance can provide a full range of business financing solutions and we ensure a high level of customer service and pride ourselves on quick decisions. Our independent status will ensure any offer of funding and asset finance leasing is best suited to our customer’s needs.

XL Business Finance, Eaton Place Business Centre, 114 Washway Road, Sale, Cheshire M33 7RF UK.

 

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