Majestic Wines has stockpiled more than a million extra bottles of wine, Unilever has stockpiled large supplies of Magnum ice-creams and Bolton-based Wepa has stockpiled an extra 3.5 million toilet and kitchen rolls. If Brexit was anywhere close to being a laughing matter, there’d be a joke in there somewhere.
But it’s not just the big names that are being advised to prepare for the unknown post-Brexit world. As I read on a PWC blog, “stockpiling, whilst a very emotive word for some, could also be described as holding additional stocks in case of uncertainty. This is also known as ‘safety stock’ which is not only a far less emotive and dramatic term but is prudent, in a customer centric supply chain, to ensure that demand can be met.”
Sound advice, but where is the money going to come from if you’re an SME concerned about the effect of purchasing additional stock on cashflow, other than from overdrafts and loans, with their accompanying hefty interest rates?
If you’re thinking about purchasing additional stock as part of your Brexit planning it’s worth considering Supply Chain Finance – a more flexible and beneficial option than borrowing, which isn’t classed as debt and is therefore kept off the balance sheet.
Under Supply Chain Finance, your payment terms are extended, but the supplier receives payment as soon as the invoice is approved. Everyone wins.
Essentially, the lender pays for stock purchases directly on your behalf, and you repay at an agreed point in the future.
Because suppliers know exactly when the cash is coming in, you’ll benefit from a lower interest rate than would normally be offered. Your credit rating will improve too, as will the buyer-supplier relationship. And, crucially, you’ll have more working capital to deal with any other uncertainties that are round the corner.
If you’d like to talk through your options, I’d be very happy to see how Whittle Hall Finance can help support your business. Just give me a call on 01925 713 212, email firstname.lastname@example.org or drop me a line via the website.