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Inbound Financing
Delivering value to top consumer producer by financing inbound material
Customer facts
Geography - MEA
Sector - Consumer goods
Services - Purchase, warehousing & sell of commodities
Customer challenge
Large consumer goods manufacturer wants an end-to-end solution to purchase, store & globally distribute commodity products with extended credit terms (180 days from FOB shipment from origin ports, mainly in Africa). This is a multinational consumer goods company with products which include food, beverages, cleaning agents & personal care products. As 50% of the commodity products consumed come out of Africa & continue to grow, hence, there is a high dependence on the purchase & shipment by reliable logistic & financial partners.
Opportunity Scope:
The customers wanted to free-up cash, decrease the value of the stock in the balance sheet, extend payment terms & by doing so improving ROCE, Net Debt & Free Cashflow position.
EVDO solution
Use of a partner entity (TradeCo) which sources, purchases & holds the title of the stock until the commodity goods are needed for production. The solution delays the onboarding of the assets into customer’s balance sheet & the date of final invoicing, moving it to the time of utilization for production. This structure also allows the extension of payment terms & the conversion of financial debt (driven by the working capital needs to finance the business) into commercial debt (payables).
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