Case Study 4
Trade Finance Intelligence
The following case study details our experience in helping a UK manufacturer to secure funding lines for clients in new export markets in Cameroon and Uganda.
The client is a manufacturer of ground level sleeves for wooden utility poles. Ground-line decay accounts for over 95% of wooden utility pole failure. The client’s sleeves are proven to prevent ground-line decay and increase utility pole life by over 20 years.
The client had secured 2 large orders from state owned utility providers in Cameroon and Uganda. Payment terms were 90 days after delivery to site.
Introduction
The client has an existing invoice finance facility with their UK bank, which enables them to accelerate cash flow against their UK and some overseas receivables.
Unfortunately, their bank was unable to provide funding limits for Cameroon or Uganda and the client was not able to obtain credit insurance cover from the general insurance market. As a result, and due to the payment terms negotiated, the size of these contracts would put a strain on the day to day working capital required by the client.
Challenges
Utilising its in-depth knowledge of the ‘trade finance’ sector, we contacted UK Export Finance, the UK Government’s Export Credit Agency to ascertain if there was appetite to provide credit insurance cover against the debtors in Cameroon and Uganda under the Export Insurance Policy. The outcome was positive.
We liaised with a selective receivables provider who indicated that they would be prepared to provide funding lines as long as they were named as ‘joint insured’ and ‘first loss payee’ under the policy provided by UK Export Finance.
The client is now able to manufacture and ship goods to their clients in Cameroon and Uganda with the confidence of knowing that they will be able to ‘discount’ the receivables which will alleviate any working capital pressures caused by the payment terms negotiated and will now seek to secure new export markets where this solution may be able to assist their working capital needs.
