The high price of lack of expertise: accumulating debt

The requirement

A company in the oil and gas industry was referred to Spark by an FX Partner via Spark Connect, seeking £100,000 to purchase stock.

Their suppliers were overseas, and the business was spending approximately £80,000 monthly on credit terms, typically between 60 and 90 days.

The business had a turnover exceeding £4 million, was profitable, and had an Invoice Finance facility in place.

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Discovering the right fit

Although they were already exposed to finance, they were unfamiliar with trade finance as a debt solution, which was an ideal fit for their overseas stock purchases.

For each stock purchase, the business would arrange short-term unsecured loans.

While this solution worked, it was becoming increasingly expensive. Due to the number of previous loans, they were overly exposed to debt, resulting in higher interest rates.

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Outcome

Spark secured a £200,000 trade finance facility for the client, who was delighted with the outcome.

As this is a revolving facility, it has resolved their cashflow shortage for monthly stock and enabled them to repay their outstanding expensive debt.

Trade Finance

Trade finance, commonly used by businesses to facilitate international trade and commerce, helps manage the risks associated with cross-border transactions, ensuring smooth operations between importers and exporters.

This solution provides assurance that payments will be made on time, and financial risks are mitigated.