business trade finance

03 Dec business trade finance

The client is a manufacturing business that imports energy efficient products from overseas.

Historically the client would use his own savings (from a residential mortgage offset account) to fund the business inventory. Typically he needs $2M – $3M working capital to purchase goods from supplier and can wait up to 80 days to receive the sales income.

During COVID 19, as part of government incentive for renewable energy, the manufacturer placed an order requiring $5M of inventory spend over a 3 month period.

Issues

• The business needs an additional $2M capital injection to purchase the additional inventory;

Traverse and Aston Partners Solution

• Initiate the discussion with the client and introduce them to a niche lender to discuss a tailored financial solution; 
• The lender Introduced a tailored trade finance facility up to $3M with an interest rate of 1.5%.

Client Win

• Interest saving of $63,300 a year due to  tailored finance facility;
• Allowed the client to accept more customer orders with no capital constraints;
• Free up $3M to invest in other opportunities, whereby the client secured two additional properties during COVID 19;
• Achieved asset protection, where the client no longer using his own personal primary place of resident as mortgage security to fund business expansion