Working Capital Solutions can help your Company with cash flow management and planning; from placement of orders with suppliers to raising cash against unpaid trade debtor invoices.

Our Solutions

How it works

Working Capital Solutions purchases the client’s full Debtors Book, and the client cedes the rights and claim to the underlying debt to Working Capital Solutions. Based on the composition of this Debtors Book, Working Capital Solutions can advance up to 80% of this Debtors Book in the form of a revolving working capital facility. This facility is confidential – the debtors in the Book are not notified of the cession of the debt, or the existence of the facility.

The client is appointed as Working Capital Solutions Collection Agent, and continues to manage and collect on the Debtors Book in the course of business. Working Capital Solutions takes ownership of the client’s Debtor Collections Bank Account.

The client makes requests for draw-downs on this facility, and interest is charged only on the outstanding balances in the facility – much the same as a bank overdraft facility. When Debtors settle their outstanding invoices, and the outstanding balance is settled on the facility, Working Capital Solutions will release the 20% Retention money, less the applicable interest charge.

Benefits

  • Increased liquidity in line with your credit sales enabling you to take advantage of business growth opportunities.
  • Ability to settle trade creditors earlier and obtain higher settlement discounts.
  • Obtain more favourable prices on bulk or increased order quantities placed on your suppliers.
  • Access to immediate cash helps ease seasonal cash flow problems and requirements.
  • By converting unpaid invoices into cash, you do not have to grant excessive early settlement discounts to your debtors in order to get paid earlier.
  • Credit control advice on the underlying debtors.

How it works

The client identifies one or a few specific Debtors to include in the facility.

Working Capital Solutions purchases the current and future invoices raised to these Debtors, and the client cedes the rights and claim to the underlying debt to Working Capital Solutions.

Working Capital Solutions will advance up to 80% of the outstanding invoices, provided the invoices are accompanied by Proof of Delivery/Performance.

This facility is disclosed – each Debtor will sign a Tri-Partite Letter, acknowledging the cession of the debt. The Debtors will pay on the outstanding invoices into a Working Capital Solutions bank account, the bank details of which are detailed on the Tri-Partite Letter. Working Capital Solutions charges a Discount Fee per 30 days, which is a percentage of the full invoice value, inclusive of VAT. Upon settlement of the invoices by the Debtors, Working Capital Solutions will release the 20% Retention money, less the applicable Discount Fees.

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Benefits

  • Increased liquidity in line with your credit sales enabling you to take advantage of business growth opportunities.
  • Ability to settle trade creditors earlier and obtain higher settlement discounts.
  • Obtain more favourable prices on bulk or increased order quantities placed on your suppliers.
  • Access to immediate cash helps ease seasonal cash flow problems and requirements.
  • By converting unpaid invoices into cash, you do not have to grant excessive early settlement discounts to your debtors in order to get paid earlier.
  • Credit control advice on the selected debtors.

How it works

Purchase Order Finance can only be offered to a client if there is a form of guaranteed local off-take – this can be in the form of a Full Book Invoice Discounting Facility, a Single Invoice Discounting Facility, or an Asset Finance Agreement.

Working Capital Solutions can pay the client’s suppliers on the client’s behalf, according to the payment and INCO terms stipulated by the suppliers. These payments are only made on the back of confirmed Purchase Orders from the client’s Approved Debtors, or an Asset Finance client (refer to first point above).

The suppliers can either be local or foreign. ‘Payment’ can be facilitated by way of Letter of Credit, or Telegraphic Transfer. The products for which Working Capital Solutions is paying have to be finished products – there must be no performance risk as a result of the client’s value-add to the product.

Working Capital Solutions charges a Purchase Order Finance Fee per 30 days, which is a percentage of the full supplier invoice value. The Purchase Order Loan is settled when the client raises invoices to its Approved Debtors, or when the Asset Finance agreement is activated.

Benefits

  • Our Trade finance department can assist with off balance sheet finance which is made available to you to take advantage of business growth opportunities presented.
  • Hedging and management of foreign exchange risks are mitigated by our Capital Markets division.
  • The risks associated with importation are identified and advice is provided to mitigate the risks.
  • Funding can be raised against irrevocable orders before the delivery of goods have taken place.

Criteria

  • You operate in the business-to-business sector and sell on credit terms with either a well spread debtors book or with a few large Blue Chip debtors.
  • Your business has been in existence for 3 years or more.
  • Your business must be solvent and profitable.
  • Your business turnover is greater than R30 000 000.
  • You have large orders that have a guaranteed offtake and need financial assistance.

Managing Director: Working Capital Solutions

Mark Maiden

Tel: +27 11 305 9400

workingcapital@merchantwest.co.za