Trade Finance
Trade Finance is a product which has been designed to allow businesses to fulfil orders they would otherwise struggle with.
This may be down to the sheer size of the order, or due to underlying cash flow issues. Many of our clients are able to identify good opportunities for growth, but simply cannot afford the upfront costs associated with the deal. Tailored to suit businesses who have confirmed purchase orders from reliable sources, it allows them to secure the stock needed for the order.
The basic process is that our client agrees to supply finished goods to their customer. The customer must be well rated, and preferably there will be some trade history between the two parties. Terms of purchase are agreed with the supplier who may be located in the UK, Europe or Worldwide. So far, everything is normal – they have a confirmed order and they have a supplier lined up. Business as usual.
This is where Creative Trade Finance comes in. We will examine the deal (what the goods are, profit margins, paperwork etc.) to ensure that everything is workable. Once we are happy with this, we will then look to set up a facility which will normally be in place for a 12 month period. Or facility will be designed to ensure you have access to cash to fulfil not only this order, but also future orders of a similar type. Once the facility has been set up, we will then purchase the goods being ordered on our customer’s behalf. We take title of the goods, and they are shipped in our name. As soon as the goods arrive in the UK, we settle any duty, VAT and freight that is due. We will pay up to 100% of the landed cost. Goods are then delivered either to the end customer, placed in one of our warehouses, or sometimes, in our clients warehouse. We will work with you to find the best solution for all parties.
Our fee is calculated from the date Creative Trade Finance pay the landed cost, until the day we are repaid by our customer. Traditionally we are repaid when our customer is paid by the end customer, although clients are free to repay us earlier, depending on their cash flow. We can also offer our Trade Finance customers a Selective Invoice Finance facility. By purchasing the invoice off our client, we can then clear the trade finance facility swiftly, therefore controlling costs and freeing the facility for use again. You do not have to find the cash to pay your supplier, and do not have to wait for potentially prohibitively long periods to be paid by your customer. By doing this, we can cut the cash flow gaps at both ends of the transaction, and shorten the cycle considerably. We can also work alongside third party invoice financiers if full factoring/invoice discounting facilities are required. Once the facility has been cleared, you are then free to go again.
As with all products provided by Creative Capital, flexibility and clarity is key. All pricing will be agreed in advance with no hidden charges. Facilities are always priced on their own merits based on the details of the deal. Once a facility is agreed, if it needs to be amended (for example to allow for additional growth or new product lines), we will always be happy to discuss this with you. Debentures are always required, as are personal guarantees from company directors.
Trade Finance can be used to help companies in most sectors, as long as the goods being imported are finished. It is not suitable for companies who are importing parts to build something (e.g. a machine) to fulfil an order. Clients include importers of lighting, furniture, electrical goods and even some perishable foods. Creative Trade Finance allows our clients to maximise their sales potential, without being hamstrung by restrictive cash flow.
How it works (click image to enlarge)
