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• 09 Mar

  Funding Alternative Suppliers Due To Coronavirus

  Previously I have written about the impact that the UK's efforts regarding coronavirus related stockpiling placed upon UK suppliers. Specifically, those who receive large orders that overstretch their available cash flow. There are solutions to this that we can offer. Call 03330 113622.

  Alternative Suppliers Due To Coronavirus

  However, we had an interesting conversation some time ago with an existing client who had identified a different problem relating to the novel coronavirus outbreak.

  This particular issue was with a supply chain that involved a supplier in China, who was no longer able to provide the shipments of products required. Others may be experiencing similar circumstances, this may be driven by the supplier's capabilities being reduced due to staff problems or the temporary lockdowns associated with controlling the outbreak of the COVID-19 virus.
  
  The issue in this particular case was that the ultimate buyer did not want products from the usual suppliers in China, due to the stigma associated with the area around the coronavirus outbreak.
  
  This meant that the intermediary within the supply chain needed to source an alternative supplier in order to provide the product.

  Need For Trade Finance

  Whilst they could find other providers, they did not have a track record with these suppliers, so they were not being offered the credit terms they usually enjoyed.

  Therefore, there was a trade finance facility requirement to fund the purchase of products from alternative suppliers overseas.
  
  The way that trade finance products work is that they bridge the gap between having to pay a supplier for a product that they are going to ship to you before you get paid for the product by your customers.
  
  A trade finance facility will bridge this gap, and ensure that payments are only made in a secure way to your supplier. The facility then grants you a period of credit in order to sell the goods.
  
  In some cases, a factoring facility can be added to the chain, in order to extend the amount of credit even further. The factoring facility prepayments then repay the trade finance facility, as the prepayments are released against invoices that are raised to end users.

  If you are experiencing similar problems, don't hesitate to get in touch with Sean on 03330 113622 and we will do our best to help you source the trade finance, and/or factoring arrangements, that you require to enable you to trade with alternative suppliers.

  By Glenn Blackman