Stories: Trade & Import Finance

Rapid growth can cause cash flow issues

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THE CONTEXT

Jay started his car parts business with a clear idea of his proposition – to reduce the cost of certified spares. This he did by manufacturing in China, while ensuring a high-quality product. Over the following two years, the business boomed and the orders came flooding in. However, expanded stock levels meant a serious drain on capital and cash flow.

So, by year three, cash flow was his main concern.

For, even though Jay had orders aplenty, a large pool of satisfied customers and an excellent track record, he couldn’t grow the business for one good reason. There simply wasn’t enough cash in the business.

THE SOLUTION

During a regular review with his Bank Relationship Manager, Jay was told that factoring was an ideal solution. Unfortunately, the bank’s couldn’t offer Jay such a facility as his company didn’t meet their criteria.

Despite rapid growth, his turnover was still below their minimum volume threshold. They also wanted a longer trading track record and, because much of Jay’s business was concentrated with a few significant customers, it would breach their lending guidelines.

Thankfully, the Bank’s Relationship Manager had heard of Working Capital Partners and suggested that Jay approach us. Working with his accountants, we constructed a deal which allowed him to continue growing his business using his receivables to finance its expansion.

THE OUTCOME

What’s happened since is best described by Jay himself:

The business is growing fast and – with WCP’s help – I am in an excellent position to exploit the market and create a real niche for my business.”

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