- 29 Jul
Working Capital For An Alcohol Wholesaler In Scotland
We have just assisted a Scottish company put in place a working capital facility in respect of the wholesale of bottled beers.
Working Capital For Companies In Scotland
There are relatively few invoice finance companies that are able to handle businesses that are based in Scotland, but were were able to find them the facility that they needed in order to support their future growth. The main issue is that Scottish law is slightly different, and so specialist agreements are required.
Funding The Wholesale Of Bottled Beer & Alcohol
The company in question are wholesalers of bottled beers containing alcohol, so they needed finance against the sale of the alcohol in order to release working capital. Growing businesses often benefit from having working capital on hand to pay for stock, staff and other expenses - this can be released by funding against their unpaid invoices. Often wholesalers end up with a number of invoices outstanding for the provision of product on credit terms. These tie up the cash that they business has until the customers pay, restricting and limiting critical cash flow.
CHOCs - Customer Handles Own Collections
The facility we found them is called CHOCs, which is short for Customer Handles Own Collections. This is popular amongst businesses that do not want a third party taking over the task of collecting their unpaid sales invoices. The client can retain this function in house, whilst still benefiting from prepayments against their sales invoices, as soon as they raise them.
The balance of the invoices, less the fee for the funding, is passed to the client when the debtors pay. This has the effect of accelerating the cash flow of the business, which can be critical when a business in undergoing a period of rapid growth. In the case of a wholesaler, the funding allows them to purchase more stock.