Stock Finance is an efficient way for companies and organisations to raise the working capital they need by freeing up money residing in their stock inventory including raw materials and/or finished products.
Stock Finance is different to our Invoice Finance service and is flexible as it provides short-term credit, typically between 30-90 days helping businesses generate the business funding they need when they need it most.
Stock Finance relates to the transfer of goods and services both locally, and internationally. Many international companies and companies working ‘cross-border’ use Stock Finance as an efficient way to secure the funding they need to ensure the smooth running of their company.
UK based distributors, manufacturing companies, wholesalers, producers and more besides can all benefit from Stock Finance services. A company will borrow from a lender and use the funds to purchase new stock that usually sits in a warehouse waiting to be sold on.
Stock Finance is used instead of trade finance when there is no tangible order to fulfil but the additional stock is required. A classic example would be a business preparing for a seasonal increase in sales at Christmas by bolstering its stock levels so that it can meet market demand.
What Areas of Business Funding Does Stock Finance Cover?
Stock Finance combines a number of business funding services that help facilitate local and international trade. Many industries can benefit from the applied use of Stock Finance and we list a number of other business funding services that are also covered by the term, ‘Stock Finance,’ below:
What’s Covered by ‘Stock Finance’
- Export Credit
- Issuing LC’s
Who Is Involved in ‘Stock Finance’
- Banks, Credit Brokers
- Export Credit Agencies
- Exporters, Importers
Many businesses need to protect their reputations and ensure that any orders are able to be fulfilled without the customer waiting unreasonable amounts of time while they wait for goods/services to be delivered.
To ease this process, many businesses are required to keep buffer stock, to facilitate the smooth running of their business, helping to ensure no orders are missed or cancelled.
Why Keep More Stock?
- Demand fluctuation for products
- Plan for seasonal fluctuations
- Mitigate business risk
- Protect business reputation by not being under-stocked
- Requirement between buyers and suppliers
- Take advantage of special offers and discounts
Stock finance is an important type of business funding and helps multiple industries where demand varies and there are uncertainties about supply and demand.
Stock finance provides additional securities between the buyer and seller where there is a risk that neither party would reach a proper settlement in any trade. Either party could renege on their obligations and so by using Stock Finance provides each party additional security and peace-of-mind throughout the trade process.
If your business is looking for business funding and is interested in learning how Stock Finance can help your business grow, please get in touch and one of our advisors will be happy to help you.