How To Get A Huge Advance In Trade Finance!

 In Purchase Order Finance, Trade & Inventory Finance

Welcome back to Whiteboard Wednesdays!

How can you get a huge advance in Trade Finance? Here are our top 5 ways!

This is a follow on from last weeks video Top 5 ways to get you Purchase Order facility approved. Check it out here!

If you would like an appointment with a Product Specialist, call the office on 1300 652 158.

Watch the video and/or read the transcript below.

1. Proven Track Record – usually provided through a financial track record or records reflecting cash flowing in and out of your business.
2. Proof you’re not going out of business – show profit and supply’s are under control, and minimal issues with the tax office.
3. Credit History – Making sure we can give you larger advance most businesses use insurance to clear this but often requires a larger advance. Sometimes more collateral is needed.
4. Build up track record – ideally the client will start of small with us in terms of borrowing and then overtime increase the amount of credit as the client proves that the cash flow is actually assisting their business.
5. Debtors happy to Communicate – Often we want to audit or essentially confirm there is an actual order in place with the customer.

Julia: Hi, everyone. Welcome back to Whiteboard Wednesdays. I’m Julia.
This is Daniel. Today we’re going to do a follow-up from our last video,
which was the top five ways to get your purchase order finance facility
approved. Now we’re moving on to how to get a huge trade advance.

Daniel: Yeah, huge trade advance.

Julia: Daniel, we’ve got the top five again. So do you want to start
with number one?

Daniel: Yeah. The first one is have a proven track record. So when you
come to your financier, show them that you’ve done what you want
the financier to do before, so either been in the industry and
got a lot of experience from it and can prove that, or you’ve
been in your own business and been doing it for a while as well.

Julia: Okay. What are some ways they can prove that though?

Daniel: Usually a financial track record. They can show us cash coming
in their account and going out of the account. Any of those
types of things would give us a little bit more comfort in terms
of them knowing what they do.

Julia: Excellent. Number two?

Daniel: Proof you’re not going out of business. Yeah, this is a good
one. One of the ways that you can look at is have a look at
their ATO arrears. So what we’d be most concerned about, as a
financier, is that when we pay for the goods or open the letter
of credit to supply in between, when we do that and when the
stock is delivered or when the customer pays that invoice at the
end, that the client goes out of business. So we want to see
that they’re reasonably solid. The best way to do that is to
show profit and show that their suppliers are all under control,
including the Tax Office.

Julia: Okay. Cool. Number three, credit history.

Daniel: Credit history is good in terms of making sure we can give them
a larger advance. A lot of funders in this space use an
insurance wrapper on their clients. So they actually trade
credit to insure their actual client. We do that as well, but
sometimes that’s not enough cover to give them enough advance to
get the deal done. So if they’ve got a clear credit history,
they can get credit insurance, but also it gives us comfort in
the fact that they’re not doing restructures all the time and
are just going to drop everything and run at the first sign of

Julia: Okay.

Daniel: The other thing we look at there on the history is also extra
additional collateral as well. So if they want a big advance
from us, we want to know, as I said in the last video, that
there’s another way for us to get paid out should the deal go

Julia: Okay. Yeah, cool. So number four?

Daniel: Build up a track record. So we’ll want the client to start off
small with us and get comfortable with us, prove to us that it
works for them before we work up the credit limit.

Julia: We do that with every one of our clients. Don’t we?

Daniel: Pretty much.

Julia: We start off small and build it up.

Daniel: These days we do. In the past, we have gone in head first.

Julia: It’s actually better for them as well as better for us.

Daniel: Yeah, because it gives them a chance to try what we do before
they buy. So they can see and get used to how we work. When they
do a bigger transaction, there are no surprises.

Julia: Sounds good to me. Number five.

Daniel: Yeah, debtors happy to communicate.

Julia: With us.

Daniel: With us, yes. So a lot of the time, where there’s a purchase
order presented to us for funding, we’ll want to go to the
customer who ordered that purchase order, and generally what
that means is confirm that there is a real order in place. We
don’t just rely on a piece of paper given to us by the client.
So if the debtor or the customer at the end, who is placing the
order, is not willing to talk to us or work with you as the
client, then that can be a big problem and us being very
hesitant to release a lot of funds against a purchase order.

Julia: Okay, great. Well, lots of excellent information there Daniel.

Daniel: Excellent.

Julia: Guys, if you’d like an appointment with Daniel, call the office
on the 1300 number. Thanks for watching.

Daniel Thank you.

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