Trade & Stock Finance
Whilst very similar and often lumped together, these are actually individual products, so what are trade & stock finance? These products can often be used in conjunction with Invoice Finance facilities as this enables borrowings to be repaid when materials and stock are sold and invoiced for rather than waiting for eventual payment. Many of the Invoice Finance Companies are able to provide them. There are also specialist providers in the market that will provide funding in these ways.
Trade Finance enables you to facilitate the purchase of stock and forward order raw materials against confirmed orders that you are processing.
Trade finance tends to focus more on materials being shipped in from overseas with lenders we work with able to pay overseas suppliers on behalf of their clients to enable the import of goods into the UK. These providers will fund up to 100% of the landed cost of stock, VAT, Duty and Freight charges. They may also pay deposits to suppliers prior to the manufacture of the end products.
A company will often keep a stock of finished goods in its warehouse to allow for the quicker supply of its own customers and this should also be considered as an asset that can be used even when there are no confirmed orders for the goods such as with Trade Finance.
Variables that determine how “attractive” the stock is to lend against will of course include how marketable the stock is if anything was to go wrong with the company, the performance of the company itself and how quickly the stock tends to be sold in normal market conditions.