Structuring Trade Finance for a Fast-Growing Import Business
In this case study
Scenario
A growing importing business was experiencing strong sales growth but increasing cash flow pressure.
The business owners had contributed approximately $1.8 million of personal funds to manage the gap between paying overseas suppliers and receiving payment from customers.
The client's existing bank had reviewed the request for more than two months but had not provided a workable outcome.
The challenge
The initial facility request was around $700,000, but the business was growing quickly and the original limit was unlikely to be sufficient. Key issues included:
- Rapid year-on-year sales growth
- Supplier payment timing pressure
- Customer receipt delays
- Financial reporting prepared on an accrual basis rather than cash-flow basis
- Need to evidence growth through BAS, bank statements, contracts and management accounts
- Need for a scalable facility that could support future expansion
How Bridle Partners assisted
Bridle Partners reviewed the financials in detail and identified that the previous assessment did not properly reflect the business's cash-flow cycle. We worked with the client, accountant and lender to prepare a clearer finance position, including:
- Updated management accounts
- Accountant-prepared financial information
- Cash-flow explanation
- BAS and bank statement support
- Evidence of new customer contracts
- Projected growth and facility usage requirements
After reviewing the numbers, the client and lender agreed that the original $700,000 request was unlikely to be sufficient.
Outcome
A $1.7 million unsecured trade finance facility was secured, with the ability to review the limit within 12 months, or earlier subject to updated management accounts and accountant-prepared financials.
The facility helped reduce reliance on director cash contributions and gave the business a stronger platform to support ongoing growth.
The finance structure also assisted the client in accessing a more suitable trading platform and expected FX-related cost savings.
In addition, the client obtained a pre-approved asset and equipment finance limit to support business expansion, including sales team vehicles and warehouse fit-out.
Key lesson
Strong sales growth can create cash flow pressure. For importers, the right trade finance structure can be just as important as revenue growth.
Is your business growing faster than your cash flow? Speak with Bridle Partners about trade finance, working capital and business funding options.
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