Invoice factoring: supply chain finance program

By October 13, 2017News

Summar got a call from a US Based company with a bank loan that wanted to increase their purchasing capacity during specific times of the year. Bank loans are fixed amounts and are usually reset by the lender once a year after presenting closed financials from the previous year. They must also be in compliance with financial institutions as well as any other conditions specific to the loan provider. 

The client had a seasonal business, where in a given month he would purchase large amounts of product, which he kept in inventory to sell during the year, and was facing a cash crunch during those specific months. The client wanted Summar’s help to pay their vendors at specific times of the year as their line would be maxed out on those months, and they did not have additional availability of funds.

After analyzing the financial strength of this Client, Summar offered him a supply chain finance program. He would then be able to leverage himself on his financial solidity to have access to a line with Summar, and we would pay his vendor immediately for all the product shipped to the Client. This way the client was able to access additional liquidity, without having to turn to his bank for additional liquidity.

Not only was the Client able to purchase all the product from one of his vendors, by paying him immediately with our supply chain finance line, but he was also able to use this line with other vendors to buy more product from them.

Some of the vendors accepted a “quick pay” fee, offering the client a discount over the total amount of the invoice for getting paid immediately. This was an ideal situation for the client since part of the cost of the supply chain finance was paid by the vendor and not by him.

The result is a client that is able to leverage himself on his financial strength to purchase more product at specific times of the year to allow him to grow his company and keep his vendors happy.