Established in 2018, our client a Nort East based manufacturer of plastic bottles was finding it difficult to take the next step in their growth. They had the equipment to manufacture 3 times their current levels, and their clients loved their product and service, but cash flow constraints meant they could not get the raw materials for the next stock cycle until they were paid for the prior one.
Through our approach of physically meeting our client and ensuring we had a deep knowledge of their operation, debtors and credit terms Vaughans identified a potential route to help the business & were able to introduce the Managing Director to one of our panel of Invoice Finance providers.
They quickly were able to ascertain that the business could benefit from invoice financing to accelerate their cash flow. The businesses debtors were of good standing and their track record of delivering quality end product good, but industry standard credit terms were 60 – 90 days.
A facility was put in place that allowed the business to receive 80% of their invoiced product upon delivery of the goods to their debtor and an acceptance of goods received. Those monies then being repaid in line with th e credit terms they needed to offer to be competitive. This line of credit now allowed the business to accept more orders as they could get the raw materials in more quickly. It has also allowed them to increase their margin through the ability to forward buy raw materials at a discounted rate.
The business saw turnover and net profitability grow three fold in 18 months and they continue to successfully grow the business to this day – growing the facility in line with their sales expansion.
We’re finally making the most of our balance sheet
