A meat wholesaler was growing and entering an additional market from their traditional clientele. They were however, experiencing achange in their cashflow cycle as their client base changed and became more diversified. They began selling to some larger clients who demanded 30 days terms. Their original clients were given 7-14 day terms. The issue was that their suppliers still insisted on 7-14 day payment terms so the mismatch of supplier and customer terms was increasing and so was the chasm of having no cash. It was becoming painful and stressful.
Their bank were not prepared to increase their overdraft to assist with their requirements for an increased working capital facility.
Their bank manager was prepared to refer their client to Lock Finance as they could not assist any further. They understood the clients need but their credit guidelines did not allow any further borrowings. This allowed continued support to the business.
Lock Finance was able to approve a Debtor Finance Facility that was 50% larger than their bank overdraft. We were able to fund the clients against their weekly sales so they could pay their suppliers on time and their clients later payment terms did not impact their cashflow at all.
A great solution for the business that will also allow them to offer 30 days terms to attract new business instead of 7-14 days that most of their competitors still require to support their cashflow. This relieved a considerable amount of pressure for the customer.