March 20, 2015
We were introduced to a steel manufacturer focused mainly in the automotive industry, turning over some £5.5 million. They required an initial line of £600,000 but growth is pushing up turnover substantially and the forecast funds out will likely rise to over £1 million. The business is well structured and profitable. Paper trail is solid, payment history good, ledger current and sound. Boxes ticked so far.
Much of the current and forecast growth arises as a result of the expansion of a major customer, so concentration is becoming an issue, and can be as much as 60% of group exposure. That business is also international in nature and 40% of turnover is now export, EC and some Far East. As a result the current funder is winding down the funding and the customer faces major cash flow concerns.
Those issues have thrown some of the major players in the invoice finance market, and therefore Pulse was introduced and a financier that is willing to think outside the box.
Now, whilst we are happy to work with concentrations, and we can also finance a proportion of export, the hands on nature of our business meant, from a verification and collection point of view, that we were not wholly comfortable with the Far East debt, albeit the debtor was well rated. We greatly wanted to assist this business, so with creative hat on we approached an invoice finance provider (we do have friends and work well with other asset based lenders), which has expertise in financing selective export debt, to sit beside us and complement the overall financing.
As lead funder, we together provided a mini club facility which enabled us to cover all of the financing requirements of the business, and importantly release the much needed cash which enables the business to continue to trade comfortably and grow successfully in this market.
This process may sound long winded, but cash flow concerns require speedy decision making, and facilities from both providers were in place within 5 days from enquiry, so hats off to our co-lenders on that one too!
Understanding the debt and how it works enables a creative approach to be adopted on all our deals. We have the ability to pull resources together to ensure a satisfactory outcome to all involved. Innovative solutions equal maximum funding!