Inventory Finance – Where A Good Product Counts For More Than A Good Credit History
Leigh has just come back from Ibiza and Majorca in Spain. He’s 29 years old, single and has been surrounded by half clad beauties for nearly 2 weeks. He hasn’t had a holiday in two years. So what does he do?
He comes back 3 days early. The highlight of the whole trip? No, it wasn’t a date with Penelope Cruz’s younger sister. What got Leigh pumped was an upgrade to business class on the Dubai to Sydney leg.
A strange, strange guy.
Just as well though, we’re flat-out at the moment and Leigh’s the nuts and bolts guy in this joint. We’ve just launched an inventory finance product and we’re under the pump. Like nearly all of our products, it’s not off-the-rack. This means we have to work it around scenarios and if the deal goes through, purpose-build the back end.
This takes time. Don’t get me wrong. I’m not complaining. Bespoke financial services are our point of difference. The challenge is to balance financial pragmatism with lateral thinking. Last Tuesday was a classic.
First, a punter calls wanting finance for 5 coffee machines – $30K. He tells me they’re demonstrator models (I wonder how many cappuccinos they’ve pumped out), and he can sell them for $60K.
“Who to?” I ask.
“I’ve got some prospects in mind,” he replies.
We all get these types of calls. The type where you have to strike a balance between personal impatience and professional service. I told him I’d be delighted to help him if he imported 5-10 machines a month (over say 12 months), and had some firm buyers lined up.
About an hour later I get another enquiry. I must admit, I wasted 20 minutes in between discussing cars with Dan – Leigh’s brother. He’s (for the most part) a really sensible guy. A civil engineer/solicitor turned banker, he has three kids and drives a Camry. But at least once a week, he goes into car fantasy. This is where his “Mr. Straight” façade is shattered and he becomes “Mr. Fickle.” We jump from Mercs to to Golf GTIs and a whole lot of stuff in between.
The next call is from a guy that’s got some brand name electronic equipment – about $250K’s worth. He has a major retailer lined-up with a PO. He was going to use the cash from a client invoice to fund the deal, but the client is waiting on another client and can’t pay for another 30 days. Sound familiar?
I ask him about fixed assets. He said he doesn’t want to involve the family home with business. I ask him about his line of credit with the bank. He told me it’s stretched.
We did the deal anyway. He had a quality product and a firm order from a good customer. Irrespective of his own circumstances, these three fundamental components were more than enough to get him over the line.
The minimum requirement for inventory funding is a quality product. One that has a strong liquidated value. If you’ve got that, don’t hesitate to call. A good buyer and a firm order is gravy.
P.S. Dan’s just gone to visit a client in his Camry. He’s wearing a Chairman Mao cap a PLO scarf and a suit. Talk about a mixed message. Maybe he should get a slightly more esoteric car, perhaps it could straighten him out in the fashion stakes.