Business Loan for Procurement Company

Over the holiday period, even larger businesses can face issues with cash flow. Not having access to capital to cover upfront costs can lead to operational delays, complications in paying employee salaries, and even reputational damage for the business itself.

A business loan is a fantastic method of quickly accessing funds to cover immediate costs and keeping business operations ticking over smoothly.

The Scenario

Our client’s business operates globally but has many locations in the United States. Being based in the UK, however, they had significant upfront costs to pay in GBP as opposed to the US dollar.

As a procurement business, they operate by sourcing, purchasing and inspecting goods and services for other businesses. This business model requires strong cash flow to cover the cost of goods, as well as capital to cover the upfront costs of the business while orders are fulfilled.

The holiday season caused our client difficulty in acquiring sufficient staff in their accountancy and financing departments to process upfront costs, leading them to seek a quick cash flow solution.

The Process

Typically, our business finance brokers would recommend a trade finance facility, here's why:

• A trade finance facility is a revolving line of credit, which allows a business to pay their suppliers invoices in full, without having to tie up critical cash, whilst waiting for stock.
• Once the goods are received in the UK, the business will settle this invoice in full with the lender or alternatively move the value of this invoice onto a traditional invoice factoring or discounting line.
• The lender will fund this cycle from the point of shipping, for up to 120 days, on an interest-only basis, meaning this can prove cheaper than alternatives.

Prior to contacting us our client had reached out to several lenders, but despite their large turnover had faced issues acquiring finance. The business’s classification as a corporate business due to its size and turnover caused concerns for some lenders.

Thanks to Clifton Private Finance’s extensive panel of lenders, however, our broker capably acquired the requested £1m at a competitive interest rate over one year, without any risk of penalties for early repayment.

Without reaching out to us, the lender faced losing money due to poor currency conversion rates. If the client was unable to secure a loan within sufficient time, they would’ve converted income from a US to UK account during a particularly low currency conversion rate period, reducing the overall value of the business’s capital.

What’s more, the time taken for currency to be converted, especially over the Christmas period, could’ve potentially taken longer than acquiring a business loan, leading to similar issues for clients in terms of upfront costs.

The client was incredibly pleased with the speed and responsiveness of our service and has since arranged to acquire an invoice discounting facility once the business loan is repaid.

If you need short-term cash flow solutions, Clifton Private Finance and our team of skilled business finance brokers are ready to assist you.