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• 19 Sep

  Funding A Confectionery Manufacturer With Orders From A Supermarket

  Another quirky example of a small startup customer that contacted us for funding help, where other invoice finance companies had been unable to help - due to the small size of the company.

  They were a small confectionery manufacturer that has traded as agents for a few years, but are developing their business by moving to supply as principals to supermarket chains.

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  Funding Confectionery Manufacture Supplied To A Supermarket

  They had secured their first order from a well-known supermarket chain, and they wanted funding against that sale.

  Manufacturers typically turn to funding sources, such as receivables finance, as it releases cash from their unpaid invoices to their end buyers. They can then use that cash to cover the cost of manufacture. This could include the cost of raw materials, staff costs and other expenses. Hence invoice finance for manufacturers improves their cash flow.

  Manufacturing companies are the second largest segment of invoice finance users (behind the services sector), accounting for almost 26% of the clients of the members of UK Finance, that provide such services (according to the Q4 2019 UK Finance statistics).

  Funding Small Businesses Where Others Were Unable To Help

  Despite the client having been too small for several of the well-known invoice finance companies, we found them an independent invoice finance company that specialises in helping small businesses. They were able to offer an invoice discounting facility, with a couple of special concessions to help a new business such as theirs.

  Special Concessions For Small Companies

  These special concessions for this small company included a 100% debtor concentration for the first few months. Meaning that they would receive the full prepayment against their customer, without a prime debtor restriction. This measure gives the customer time to expand their debtor book. The funder was also prepared to waive any minimum monthly fee for the first 4 months, giving the company a chance to establish and build its trade volumes.

  It is early days for this business, but this chain of events demonstrates how we can find alternative funders even when large, well-known invoice finance companies have been unable to help.

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  Related Resources

  See our free Business Startup Guide.

  By Glenn Blackman