More Solutions

Providing Businesses Funding Solutions

Inventory Financing

How Inventory Financing Works

Why is Inventory financing necessary?

As the owner of any business that sells physical products, you can probably think of a few situations where it would be advantageous to have more cash on hand to buy inventory. Perhaps you’re gearing up to expand sales at your brick-and-mortar location(s) and need financing to stock the shelves. Or, maybe one of your suppliers is offering a temporary sale on one of your top-performing products, which could mean massive savings if you are able to quickly buy in bulk.

Touchstone Finance & Leasing has helped 1,000’s of clients satisfy this need by providing essential inventory financing. The typical inventory loan will be based on 60% to 80% of the value at cost of your inventory.

International Trade Finance

What is it?

  • International trade finance is like a financial superhero that helps businesses buy and sell stuff across borders.
  • Imagine you run a company that sells delicious mangoes. You want to send your mangoes to customers in different countries. But there are risks, like not getting paid or losing money due to currency changes.
  • That’s where trade finance steps in! It’s like a safety net that ensures smooth
    transactions between you (the seller) and your customers (the buyers).

How Does It Work?

  • Banks and financial institutions play a key role. They offer tools like:
    • Letters of Credit (LC): Think of it as a promise from the buyer’s bank to pay you once you ship the mangoes. It’s like a guarantee!
    • Factoring: You get paid based on your outstanding invoices. So, even if your customer hasn’t paid yet, you’re covered.
    • Insurance: Protects you from non-payment or shipping mishaps
  • These tools make sure everyone plays fair, and the mangoes ( or any goods) move smoothly from one country to another.

Why Is It Important?

  • Global trade relies heavily on trade finance. Around 80% to 90% of world trade uses it!
  • Without trade finance, businesses would hesitate to trade internationally due to risks.
  • So, next time you enjoy a juicy mango from another country, remember that trade finance made it happen!

Supply Chain Finance

Supply chain is the flow of goods and services towards the end customer and the flow of money from the customer back up the chain to the supplier. Supply chain finance (SCF) refers to the techniques and practices used by banks and other financial institutions to manage the capital invested into the supply chain and reduce risk for the parties involved.

Supply Chain Finance

Supply chain finance (SCF) is a set of technology-based solutions that aim to lower financing costs and improve business efficiency for buyers and sellers linked in a sales transaction. Let’s delve into the details:

  1. Automated Transactions and Tracking:
    • SCF methodologies work by automating transactions and tracking invoice approval and settlement processes from initiation to completion.
    • Buyers agree to approve their suppliers’ invoices for financing by a bank or other outside financier (often referred to as “factors”).
    • By providing short-term credit, SCF optimizes working capital and provides liquidity to both parties.
  2. Advantages for All Participants:
    • Suppliers gain quicker access to money they are owed.
    • Buyers get more time to pay off their balances.
    • Both parties can use the cash on hand for other projects, keeping their respective operations running smoothly.
  3. How SCF Works:
    • SCF works best when the buyer has a better credit rating than the seller.
    • Buyers can access capital at a lower cost from a bank or financial provider.
    • This advantage allows buyers to negotiate better terms with the seller, such as extended payment schedules.
    • Meanwhile, the seller can unload its products more quickly, receiving immediate payment from the intermediary financing body.
    • The financial institution pays the Supplier and extends the payment period for the Buyer, resulting in a total credit term of 60 days instead of the usual 30 days mandated by the Supplier.

In summary, SCF provides a win-win situation by enhancing liquidity, improving efficiency, and fostering collaboration in supply chains.