Allow clients to ease your path to cash

Imagine, you’ve been developing a relationship with a blue chip company and eventually you pitch a service or product to them. They are impressed with how you sold them on the benefits of your offer. And now they have placed a large order for you to supply them. You celebrate as the ink dries on the signed contract. However, there is a slight problem on the horizon because at this stage you don’t have enough working capital to initiate the delivery.

You may be interested to know that your client can facilitate covering the costs through the vehicle of Supply Chain Finance. The way in which this works is that your buyer presents a list of approved invoices to a finance house. They provide the loan with interest, which is guaranteed by your client. Then your invoice is paid less a percentage of the invoice value.

The government backed a task force led by Tim Breedon, CEO of Legal and General. Its focus was on alternative financing options for small and medium size companies. In Breedon’s Report — Boosting Finance Options For Business, he gives eleven recommendations, including one that states that the government should:

“Explore how it can use its power as the biggest purchaser in the UK to encourage its own suppliers to adopt supply chain finance or similar schemes to support their suppliers. And work with banks, industry associations and professional bodies (such as the ACCA, ICAEW), to accelerate adoption of Supply Chain Finance.”

The Prime Minister, David Cameron, met with a range of corporate companies including; Marks and Spencer, Carillion, O2 and BAE Systems to explore how large businesses can give financial support to its small suppliers. The government is actively encouraging these types of companies to unlock the estimated, collective resource of £20 billion, to help struggling suppliers to access funding. This type of resource is available for working capital as opposed to investment.

Five big businesses that are currently providing this type of financing are:

· Network Rail

· B.T.

· Rolls Royce

· Tesco

· Vodafone

Although Breedon’s Report relates to large institutions, who in your current client network could you approach to explore this type of arrangement with? Think about those clients where there is a strong relationship with integrity and shared or complimentary values.

I look forward to hearing how you get on. We can continue connecting via Twitter — @BybreenSamuels,, If you like this post, please recommend it to others.


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