Are lengthening supply chains and increasing raw material prices stretching your working capital?

Capital Advisory

From Ernest Partners

Are volatility in raw material prices and delivery times stressing your working capital facilities? 

And the banks say “NO” to further increase your traditional banking facilities?

Hold on tight a bit longer, help is on its way!

Whilst financing receivables is a common financing method, a large part of other floating assets remains “underfinanced”. The financiers of your inventory are commonly your suppliers (often not very pleased to play this role…), your pre-paying clients or by chance your banks through a straight loan facility. But are there other ways to finance your inventory and purchase orders?

Well, as said, help is on its way!

Inventory Finance is finding its way to Belgium! And not only traditional banks are developing this: Fintechs and specialised funds (also referred to as alternative lenders) are completing the working capital lending offer too.

Since the legal context on pledging assets has improved since 2018, it is now much easier for lenders to pledge and finance specific assets. Even better, the Belgian legal context also allows for the pledging of orders and contractual rights. This opens up the possibility of financing your whole supply chain and production process.

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Nowadays it is becoming much easier to connect ERP systems to auditing and bookkeeping software, enabling the daily analysis of the inventory movements and updating of your financing need, while guaranteeing a correct security position to your inventory finance partner.

Do you also need to bridge orders and delivery times?  Orders or inventory in transit can be financed through Inventory Finance, even when covered through any trade document (like an L/C).

OK, clear! Why doesn’t my bank propose such a nice finance product to me?

In surrounding countries, large traditional banks have developed a performing trade finance business, including Inventory Finance solutions. While in Belgium inventory-based finance solutions are scarce and not easily accessible for midsized companies. Nevertheless, some local Belgian banks are currently considering to further develop their working capital finance capabilities.

How can Ernest Partners help?

Is your inventory increasing? Is your supply chain lengthening? Do you need to increase strategic stock positions? Are your suppliers not as timely as before in their deliveries…, while your clients demand shortly and timely delivery? Inventory finance could be a solution for you. Ernest Partners will gladly help you analyse your situation, work with you on improving your working capital finance and select the best partner to implement the most suitable solution.

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Author : Nicolas Van Klinkenberg

Author : Nicolas Van Klinkenberg

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