When things get stretched to breaking point, trade and invoice finance might be the answer

LONDON - Sept. 23, 2015 - PRLog -- It’s that time of the year for many fashion suppliers, orders placed in the early part of the summer are now being delivered for the vitally important winter, Christmas and New Year buying periods, but that also means orders need to be paid for. Now though, as well as a bank overdraft,  suppliers  have a flexible source of funding called trade and invoice finance, with one of the best known providers  being Sterling Trade Finance.

For established operators working with independent and multiple retailers, cash flow is unlikely to cause too many issues. But every now and then, a new store arrives on the UK high street, which will have new suppliers, some established, some not. PEP&CO is a good example – established by former Asda chief executive Andy Bond, it opened its first clothing shop in Kettering in July and will complete the opening of another 49 this month - around one a day in towns across Britain.

PEP&CO will be hoping its new take on fashion will help boost footfall and clothing sales in small town centres and to do that, they will have bought carefully, hoping to carve out a new style reputation. New initiatives such as this can often mean going outside of the traditional suppliers to the industry and dealing with innovative, smaller companies who may have spotted new trends in the market.

For the fast growing young supplier to the fashion sector, arguably the biggest challenge they face is the funding of new and growing orders. Fast growing suppliers by definition cannot call upon the long credit history and strong balance sheet often demanded by the banks prior to lending, so to grow, they need to look at other forms of finance, such as trade finance, invoice finance and factoring.

Sterling Trade Finance lends money not on the basis of how strong a company is or how good its credit history is, but instead, they use the quality of a confirmed purchase order or invoice as their main security. Operations Director Steven Pleace explains, “In practice, lenders have a range of securities they can choose from, when deciding whether and how much to lend to a client. For us, the key security is the purchase order from or sales invoice to their customer, normally a high street retailer whether in the UK or abroad. Industry knowledge and experience is essential, though, if an arrangement is to work for both parties. Good experience of the specifics of the fashion industry are needed and we have a long history of supporting clothing and fashion suppliers.”

Like any market, having a financial partner who is experienced in the wrinkles of the rag trade is vital and this is where companies such as Sterling Trade Finance are starting to make a difference by giving smaller suppliers a lifeline to enable them to compete and grow.

For Sterling Trade Finance, the quality of the security lies in the quality of the order won by their Client. So a small company selling to leading UK High Street retailers knows it has a good quality and highly negotiable asset in the shape of its orders and invoices and it now has a new weapon at its disposal to use to raise funds to grow.