Funding Business GrowthOptions available to

businesses

Challenges Facing UK Business

29.6m people in employment in

the UK

13.6m employed by SMEs

45% of employment

Combined revenues of

£1.6tn

Since 2008 the SME sector has suffered a lending decline of 40%

UK economy is about SMEs

Scenario

Finished Goods

Gross margin of 35%

A business has won a substantial new order and is examining the options available to it to finance the order

Substantial businesses

Good credit

Manufactured outside the UK

Established supplier

Approximately 90 days

The Order

The Goods

The End Customer

The Trading Cycle

Traditional Sources Of Finance

Loans Mortgage

Supplier

Customer

Sell shares

Shareholder investmentBank Lending

Shareholder Finance

Negotiating Payment Terms

Internally Generated CashReduce cost

Restructure

Equity Finance

Traditional SourcesBank Lending

Loans/Overdraft

Import/Export loans

Invoice discounting

When security is fully utilised, no additional lending will be available

Typical Banking Products

Banks Lend Against Security

Traditional SourcesInternal

Improve efficiency

Reduce costs Refinancing unencumbered assets

Cost Availability

Permanence

Risk

Release Cash In The Business

Shareholders Loans

Traditional SourcesExternal

Cost Valuation

Control issues

Timing

Equity Finance

Payment Terms - SupplierExtended payment terms

Profit share

Payment Terms - CustomerEarly payment discounts

True Trade FinanceWhat is true trade finance

Ability to fund the supply chain without taking on debt or selling equityThe fundamental difference is that true trade finance is not lending; its tradingA true trade financier takes genuine risk by buying goods against confirmed purchase orders

Scenario RevisitedIt was a true example

3 years old

Substantial new orders

Finished goodsdesigned in the UK

Manufacturedin China

Nearly doubling of revenueThe Business

The Order

The Goods The End CustomersMajor high street retailers

Good credit

The problemBank unable to extend further

financeSupplier demanding large deposit

The Trade Finance Solution

The Trade Finance SolutionKey Differentiators

Against confirmed purchase orders

Typically use of letters of credit

Trade financier enters into the supply chain

Ability To Open Purchase Commitments

End to End Supply Chain Finance

Physically Trading Of Goods

Transactional FinancePay when used

Goods That Have Been Funded by TFP

• Gas BBQs• Pizza boxes• Bluetooth keyboards• Seasonal giftware• Homeware• Iron ore• Used vegetable oil

• Baby clothing• Commercial batteries• Replacement

windscreens• Components for

hydro-power stations• High resolution

surveillance cameras• Garden games• Recycling equipment• Components for oil

industry• Woodchip/biomass

When It Goes Wrong

We have to accept that things do go wrong

Work with client to mitigate loss

Marine and credit insuranceWe Take Risk

Insurance

Communication SecurityThrough ownership of the goods

Knowledge and Experience

Due DiligenceDebentures

Warranties

ConclusionAll things to all people; there is no one size fits all

It is essential to understand the limitations of solutions as it is to understand the benefits

More than one product may be required to solve the funding challengeBusiness people must ensure they are aware of solutions available and how to use them