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Driving growth for FMCG Businesses

Despite the pandemic conditions that have seen many industries suffer, retail FMCG brands are experiencing stronger growth than ever. This presents an opportunity for FMCG businesses to unlock fast cash flow support, by leveraging the power of their unpaid invoices to reinvest into operations and growth. By partnering with Lock Finance, we help businesses realise growth by leveraging an existing asset, their invoices.

A challenge for many growing businesses is accessing finance quickly to adapt to fast-changing requirements, particularly as access to finance is getting harder and more expensive. While traditional business loans require large amounts of paperwork and can take six to eight weeks to get approved, invoice financing offers a quick way to loan against the amounts due. Rather than stagnant their growth while waiting for invoices to be paid in full, businesses can unlock the cash flow potential of unpaid invoices. For newer businesses, who do not have enough of a trading history that banks are comfortable lending to, invoice finance is a solution that allows them to adapt quickly, and does not require personal guarantees.

The FMCG industry is one in which businesses can really realise the value of invoice financing, as winning distribution agreements with large retailers create growing pains and cash flow demands. This creates pressure for cash to recycle back into the business so the business can order more products, and packaging and cover increasing wages. Invoice financing provides a way to unlock faster cash flow that supports the rapid scaling of business operations. That is because invoice finance treats invoices as assets, which is how they appear on the balance sheet. So many entrepreneurs forget that invoices are assets that can be borrowed against and invoice financing allows them to utilise them to help fuel growth. Unlike many banks, invoice finance companies are used to partnering with growing companies with many of those being within the FMCG industry.

Here are a few ways small-to-medium FMCG businesses – including manufacturers, wholesalers, distributors, and retailers – can benefit from invoice finance.

  • Unlike an overdraft or loan, your invoice finance facility grows with the value of invoices issued. This makes it possible for rapid growth as the business's access to cash flow scales with business growth
  • Growth often requires bringing in new employees. Having access to steady cash flow is the first step to having the confidence to offer employment. Knowing that cash flow won’t be an issue allows the business to recruit the best talent for the job.
  • Seasonality and inventory management often play havoc with cash flow. When customers delay payments, it creates a snowball effect on cash flow. Unlocking the power of your unpaid invoices enables the business to purchase inventory when the business needs and secures the most favourable terms.
  • With invoice finance, interest is only charged for the period that funds are borrowed. It is this flexibility and control that makes invoice finance the smart choice for growing FMCG businesses.

How do you go about setting up an invoice finance facility?

With modern accounting platforms like XERO, performing the analysis to determine what kind of cash flow solution works best for the business is easy. A simple extract, uploaded to Lock Finance’s finance platform allows for rapid analysis.

The team at Lock Finance work with the business owner and accountant to structure a cash flow solution that helps the business meet its payroll, supplier, tax, and growth requirements. Each solution is tailored to the specific business needs, including advice on how to manage accounts receivables and supplier payments so that the business is securing the best trade terms possible.

Most businesses forget that their invoices are actually assets. Unlock the power of your unpaid invoices, and speed up cash flow to grow.