Smart finance solutions can mean the difference between a business securing major contracts and sales opportunities, or missing the boat.
In rapidly changing global markets, businesses often have to act quickly to capture trade or sales opportunities. That’s why they need access to fast, flexible financing. Here are some common scenarios that can put pressure on companies.
1. Seasonal or surging demand
Many business experience seasonal peaks. This particularly relevant to businesses that supply goods to retailers. Often a surge in demand may mean that their existing working capital facilities are insufficient to allow the business to acquire goods to meet the opportunities offered by the increase in demand. Trade finance is ideal in such situations, ensuring that cash availability matches demand – allowing a business owner to place orders quickly and fulfil their customer’s needs.
2. Traditional bank facilities too inflexible
When a business already has funding in place through the banks, and all lines are fully drawn, this is the time that it makes sense to supplement existing working capital facilities. Tradeline can complement existing facilities without the need for mortgage security and provide funding lines in multiple currencies.
3. Large sales orders or growth prospects
Buying power is crucial for a business in a range of scenarios. For example, if it is invited to tender for a significant contract or assist a large on-seller, the business will often need immediate access to funding. Similarly, if an existing client wishes to purchase a much larger order than normal, cash will be required to allow time for the goods to be acquired, shipped and delivered to customers.
4. Restrictive terms of trade with suppliers
If a business does not have a lengthy trade history with suppliers, those suppliers will often require payment up front or a sizeable deposit. This is often the case with overseas suppliers.
5. Supplier discounts
If a supplier offers temporary discounts for either bulk purchases or earlier payment, the buyer will naturally want to take advantage of such prices using a reliable trade finance option. Likewise, access to cash is essential if a supplier is ending the sale of certain stock, including deleted lines, or liquidating stock at below-market prices. A line of credit from a trade finance provider is a perfect solution in such circumstances.
6. Cash-flow crunch
Working capital constraints and cash-flow pressures can derail small and medium-sized businesses’ plans and even prevent them from purchasing the stock that is essential to meet sales orders. Tradeline can provide funding to pay suppliers and acquire the stock to keep the business alive and growing.
7. Competition for supply
Importers are competing with the rest of the globe when it comes to suppliers, so when opportunities emerge to source specific products from vendors, the business may need to access cash quickly to make it happen and snap up opportunities.
8. Favourable exchange rates
Sudden positive exchange rate changes may present a real, but temporary, buying opportunity for importers or exporters. This is the time to take advantage of a favourable exchange rate and improve margins. Immediate access to funding is the key in such circumstances to capitalise on great rates.
Spotted an opportunity?
If you recognise any of the above scenarios with your business clients, a Scottish Pacific Tradeline representative will be happy to discuss its alternative financing solutions. For more information, contact us here