In Business ‘Cash is King’ but could Trade Finance be your ‘Cash Flow Prince’? 19/01/2018

‘Cash is King’ is a well-used term in the business arena and rightly so. As many an Insolvency Practitioner will tell you rarely do they deal with an insolvent business that has significant cash resources.

Are you underutilising your good credit insurance rating when you could be freeing up cash?

Businesses can often hold onto cash by using the credit terms afforded to them by their suppliers. Extending credit to customers is maybe a ‘necessary evil’ of doing business, many suppliers will take out credit insurance cover to protect themselves against bad debts. Suppliers building up sales debtors’ positions can always look to use book debts to secure working capital through loan or invoice finance facilities to help their cash flow positions.

Whether suppliers granting credit terms or lenders providing working capital facilities, it would be somewhat reckless if they did not look into the credit rating of a business. Whilst Lenders will look to Debentures, additional security, complex logarithms and maybe even supported PG’s to help cover their facilities, suppliers either take the risk of granting trade credit or put in place a bad debt protection insurance policy.

Many businesses who are receiving credit have good credit insurance limits in place for the benefit of their supplier. Yes, this does enable the supplier to grant them credit facilities but many businesses may not realise that they could use their credit insurance status to help them obtain trade finance facilities. This can provide significant cash flow benefits earlier in the working capital cycle of specific trades.

If you are a business with a good credit insurance rating, that imports goods and is required to provide cash deposits, cash against documents, Letters of Credit, Pro-Forma payments, etc then Trade Finance could be your ‘Cash flow Prince’.

Imagine if on the back of the credit insurance rating your business was granted an additional line of credit available for specific purchase transactions including those requiring Letters of Credit and Cash against Documents.

White Oak IE provide such facilities and are looking for good quality businesses who would benefit from having access to such facilities.

Monthly charges are one of the most competitive in the market place against the cost of the goods purchased. For businesses operating on good margins it can be a very cost-effective way of not having day to day working capital facilities tied up with goods on order that have not yet been received. The facility is usually available for up to 120 days.