Business owners know too well how challenging it can be to manage cashflow and keep operations running smoothly. With many already accustomed to facing delayed payments from customers, unexpected expenses, and seasonal fluctuations, the past few years have seen issues linked to Brexit red tape, pandemic backlogs, labour shortages, inflation rates and rising costs added to the mix and make trading circumstances even tougher to navigate. More than ever, many businesses are having to keep a close eye on outgoings and to find ways to cut costs to keep moving, which is why many have turned to asset-based lending to access strategic funding that can help them meet their ambitions.
A challenge common to many businesses, obtaining good credit terms from key suppliers has become even more difficult today with them facing the same working capital pressure points, and many suppliers now insist on pro forma payment terms which can create a cashflow gap and put a business at risk. With finances already stretched in most other areas, some are finding it adds another layer of difficulty to cashflow management as large payments may be necessary in order to fulfil an order and prevent additional work from being taken on until the end customer has paid .
What is Trade Finance?
Trade Finance is a form of short-term funding that helps businesses bridge the gap between paying their suppliers and receiving payment from their customers. With the help of the asset-based funding solution, businesses are able to secure the goods they need to fulfil their orders, without having to worry about cashflow problems.
How does Trade Finance work?
Having been approved for a credit limit based on several factors such as business performance, customer profiles, unique needs and ambitions, a business can place an order with a supplier and have up to 100% of the invoice paid on their behalf directly to the supplier within 24 hours. The order is then delivered to the end client, who is invoiced as usual. Once the customer has paid for the order, the business is able to repay the supplier and keep the profit.
What are the benefits of Trade Finance?
Trade Finance offers many benefits, such as:
- Improving cashflow and working capital
- Increasing purchasing and negotiation power with suppliers
- Facilitating larger orders and taking on new customers
- Reducing the risk of bad debts and currency fluctuations
- Supporting domestic and international trade
Ultimate Finance’s Relationship Manager Beth Taylor adds, “Trade Finance is also a great tool for seasonal businesses which can really feel the pinch when it comes to making purchases to fulfil orders. One of our clients sees the majority of their turnover from Christmas sales, which take place between the end of August to November, but to complete these orders they need to source stock as early as May as the goods come predominantly from China. A Trade Finance facility has been a great support to help them meet critical supplier payments whilst cash is tight, and as a result their relationship with their key supplier has been strengthened, allowing them to grow from year to year”.
Ultimate Finance’s Trade Finance solutions
At Ultimate Finance our Trade Finance solutions are available to any UK registered or domiciled business and offer:
- Up to £1m funding limit
- Up to 120 days repayment terms
- A dedicated specialist Relationship Manager
- Can be directly linked to an Ultimate Finance Invoice Finance facility
Find out more about Trade Finance or get in touch with Ultimate Finance today to discuss your funding requirements.