Options
Stock Finance
This is perhaps the most difficult form of finance for a business to secure.
Whilst there is no shortage of lenders who purport to offer stock finance, the reality is that very few businesses will ever qualify for a meaningful facility.
However, for a suitable business, with strong stock control systems, a revolving funding line against your inventory can be an extremely useful source of additional working capital.
Stock finance usually runs alongside an invoice discounting facility, and is typically aimed at companies turning over at least £5M, with stock levels in excess of £1M. Below this level, stock finance is unlikely to deliver a meaningful sum, and is simply not cost effective.
If your business does not qualify for true stock finance, we can often negotiate an invoice discounting facility with an increased advance rate (sometimes up to 100% of outstanding invoices), to reflect the additional security your inventory represents.
Finished goods and raw materials are the most attractive security for a facility, although work in progress can be financed in certain circumstances. Headline advance rates are typically 50 to 60%, but this will be reduced by reserves and retentions to around 20-30%, except in exceptional circumstances (ie where your inventory is a commodity product).
Stand-alone stock finance is available to larger companies, and can be particularly useful for retailers, where it is likely to be a significant asset.
If you are considering stock finance for your business, please call us to discuss your requirements. An early conversation will enable us to determine whether or not this form of finance may be suitable.