How You Can Avoid A Manufacturing Disaster, Trade And Debtor Finance Case Study

 In Inside AR Cash Flow, Invoice Factoring, Invoice Finance, Purchase Order Finance, Trade & Inventory Finance

How can you ensure the goods received from your manufacturer have been produced to your specification?

How do you avoid ordering a potential mystery box of stock?

Our next case study is an electronics importer with a 750K facility limit.

In this video you will learn;

  1. Why we wanted to finance this client
  2. The most important element to any transaction
  3. Steps to take before raising a Letter of Credit
  4. Why choosing the right manufacturer is crucial

By the end of this series you will have an insight into what we have learned about importing.

You will be armed with information we have obtained from the field.

For an appointment with a Product Specialist call the office on 1300 652 158

Watch the video and/or read the transcript below


































Julia: Hi guys, Julia from AR Cash Flow here. I’m back again with my
fantastic sidekick Daniel.

Daniel: I prefer trusted.

Julia: Today we’re going to talk about a debtor and trade finance
facility for an electronics importer with a 750K limit. Daniel,
let’s start with saying why we took on this deal in the first
place and why it was such an exciting deal for us, and then
we’re going to focus on the challenges. I think that’s the main
thing we’re going to talk about today.

Daniel: Okay, all right. Excellent.

Julia: Cool. Let’s start.

Daniel: Okay. Well, there are two main reasons we were really excited
with this client originally. The first one was he had an
excellent profit margin of 40%. That means he’s landing those
goods and still having that margin in it.

Julia: Excellent.

Daniel: The second point was that he had solid debtors here in
Australia. He had really good paperwork evidencing the purchase

Julia: Paperwork, paperwork, paperwork, that is one of the most
important things I think we’ve learned out of this series.

Daniel: Yeah, and did I mention paperwork?

Julia: No, but I’m going to say it again, paperwork.

Daniel: Okay, great.

Julia: Cool. Let’s move on to the key takeaway from this deal.

Daniel: The key takeaway here from this deal all swings around
inspections. So making sure that when, before you raise that
letter of credit or before we raise that letter of credit to
your manufacturer, make sure that they can deliver on their
promises. Where they [send] failed inspections, where there are
a couple of points, the first point was that the goods weren’t
being inspected and they weren’t made to the specification of
the debtor or the customer here in Australia. So that was
failure number one. The second point was when we went to do the
inspections, we found that the quantity of the goods was not
there either.

Julia: Right. How could this have been avoided?

Daniel: That’s a really good question. It’s not a perfect science, as
we’ve said before. Things do go wrong. The way you can do it is
to do inspections along the way, but that’s not always going to
be practical. You’ve just got to use your common sense with
these types of transactions. If you think the manufacturer is
not going to be capable, use your gut a little bit as well. If
you think they’re not going to be capable of making these goods
or you think something is wrong with it, it’s probably best to
find a manufacturer who you feel more comfortable with.

Julia: Yeah, absolutely. Well, that makes sense.

Daniel: Yeah.

Julia: Okay, cool. Was that it, Daniel? Did you want to add anything

Daniel: No, that’s pretty much it this time.

Julia: Okay, great. Guys, call the office on the 1300 number to book
an appointment with a product specialist, and thanks for

Daniel: Thanks for watching.

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