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Case Study

Stockpile Finance - for a business looking to the future

There are many business uncertainties caused by Brexit, but one of the most challenging is the worry about supply chains.

Many UK businesses depend on suppliers based in the EU. Whenever and however Brexit comes, it may mean that there are customs barriers that put those supply chains under strain.

And it is not just worries about future tariffs and customs problems. The falling pound has already caused headaches for UK businesses who find that their suppliers need to be paid in euros. To avoid the problems with foriegn exchange fluctuation, and possible customs costs, many are stockpiling. It may be a sound precaution for an uncertain future, but it can mean problems with cashflow if you store large quantities of high cost stock. 

Our client was a marble specialist, supplying and installing marble in kitchens, bathrooms and feature floor areas of large, upmarket homes. His clients expect him to be able to supply marble in a wide range of colours - and the only quarries capable of providing the quality and range they demand are in Europe. 

“Italy has been the source of the best marble for at least two thousand years. We can get some colours from elsewhere, but the best stone is found in the Carrera region. I always joke that it was good enough for Michelangelo, so it is good enough for us - but the simple truth is that ,not only is the stone itself superior, the quarries know how to prepare it properly.”

The client was worried about what would happen after Brexit and, to safeguard his business, he invested heavily in stock, filling his own warehouse and taking space in a nearby unit.

“Having the stone on hand is better for us that waiting a month to get it delivered - but the real reason for stockpiling was worry about exchange rates. We already have to charge 20% more than we did before Brexit was thought of. It could get much more expensive in future.”

The problem came when his business began to slow down as the housing market began to stagnate. Domestic customers were not moving and refurbishing their new homes, while the commercial market had become wary of any expenditure that was not absolutely necessary.

“Things slowing down started to give me some cashflow issues. We were not in trouble, but things were getting a little tight. I went to the bank for a loan - and realised I had a problem.

Has your business stockpiled due to the uncertainties of Brexit? Do you have money tied up in raw materials or stock which is affecting your cashflow? Find out how funding could help answer your challenges 

The challenge

The problem was that the bank looked at his accounts and saw large outgoings over the last six months, but little work and income coming in. It looked as though the business was trading at a loss. 

Our client tried to explain that the paper losses were the result of stockpiling, but the banks have their hands tied by their own systems and could not help. He got similar responses when he went through brokers.

Then he remembered how he had got the answers he needed before with Rangewell, and called us.

We can provide all types of business funding, and the lenders who may be best positioned to provide it. We know the lenders who are most likely to be understanding when there is a particular business challenge, and we found several who would be able to help. 

A straightforward solution

When we demonstrated that the company's cash problems were balanced by a large stockholding of valuable supplies, rather than any real trading difficulty, there were several that were willing to provide solutions. 

We found a specialist lender working in the building sector which could provide the £15,000 funding our client needed for a six-month period.

At Rangewell, we can help businesses of all kinds find better answers to all their funding needs. Whether that answer is a loan, Asset Finance, Commercial Mortgage or any other kind of finance - our expert teams find the most appropriate funding solutions while our network of lender contacts and our sophisticated online search systems let us find the most cost-effective rates.

If your business is carrying more stock than usual, and suffering from cashflow issues, or if there are any other challenges, simply call us. Our service is independent, fast and absolutely free.

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