In the wake of the global credit crunch, financial experts are predicting
hard times ahead for industry importers. Many companies are set to
discover that their usual lenders will not renew existing funding lines or
will demand higher levels of security for lower value transactions. As
such, importers are being urged to seek out alternative methods of funding
now - rather than waiting until they fail to have their current facilities
renewed.
One product quickly emerging as a better solution in the current financial
climate is Integrated Stock Funding (ISF). Offered by leading UK
asset-based lender and commercial finance specialist Davenham Trade
Finance, ISF allows industry importers to overcome a number of the funding
issues they now face.
Offered for transactions of between £10,000 and £4 million, ISF allows an
importer to better control their overheads and maintain greater economies
of scale. It does this by providing import funding and supporting a
transaction with key elements of warehousing and logistics. To deliver
ISF, Davenham works in partnership with MAM Processing Limited
(who have extensive experience in running the back office operations of
various e-commerce websites) to hold and control stock, and manage
distribution on to the reseller as and when called off.
Not only does this remove a significant headache from the importer leaving
them free to concentrate on brokering deals and making a profit, but
through MAM's use of advanced stock control systems it also allows
importers to operate in a Just-in-Time fashion - ensuring they only pay
for the storage space they need. This delivers further benefit at a time
when most large retailers are issuing indicative purchase orders, as
opposed to firm ones, in a bid to move the risk and expense of stock
holding out of their business.
The ability of ISF to provide support with warehousing and logistics also
opens up new opportunities for the importer. It makes it easier than ever
for them to sell over the Internet direct to the consumer - a route which
typically offers far greater margins than selling through a retailer.
In addition, ISF is closely tied to MAM's stock holding systems allowing
Davenham to offer a higher level of funding against stock than would
otherwise be possible. The increased awareness the lender enjoys enables
them to match funding levels to stock moving speed. What's more,
Davenham's security is "in the transaction' - meaning they can fund
importers who perhaps do not have the 100% security or the AAA credit
rating now being sought by many lenders as the financial world tightens
its belt.
Speaking of ISF and its growing popularity, Davenham Trade Finance's Sales
and Marketing Director, Clive Naylor, said: "Davenham prides itself
on its entrepreneurial approach and ISF is an extension of this. At a time
when most conventional methods of finance are becoming increasingly
restrictive and expensive, ISF offers the industry importer greater
flexibility whilst reducing their fixed costs for warehousing and distribution.
It also funds on a transactional basis with fixed interest rates so the
importer knows exactly what profit they will make. This is of particularly
important consideration when interest rates are rising."
Clive continues: "Considering all this, and the fact that ISF takes away
a large amount of administration from the importer, such as sourcing
quality warehousing, arranging freight and distribution, it's not hard to
understand why it is becoming such a popular choice. ISF is making deals happen that simply weren't possible before."
More information on ISF can be found at www.isf.uk.com
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