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Stock Financing
Delivering value to top retail group by financing warehoused stock
Customer facts
Geography - Europe
Sector - Retail
Services - Purchase & financing of warehoused Inventory
Customer challenge
A European retail group was facing working capital constrains driven by the sizing & re-fulfilment needs to serve their different point of sales. Despite the implementation of a supply chain program with its top suppliers, there was still a large amount of inventory (mainly of self branded products) that could be optimized in terms of blocked liquidity. Therefore, the customer was highly interested to unlock the monetary value of part of the inventory through a stock financing program, using a 3rd Party Trader, which could shift what would be a financial debt into a trade debt.
Opportunity Scope:
The customer wanted to anticipate liquidity associated to the existing stock & move finance debt over the inventory into trade debt.
EVDO solution
Efficient management of the market value of the assets blocked in the existing inbound inventory through the creation of a new flexible & bank agnostic factoring program. Anticipated cash, combined with extended payment terms & designed to reduce the liquidity gap between customer’s DPO & DSO. Achievement of a cashflow positive position as value of the goods are monetized very early in the supply chain cycle. This, combined with 3rd Party Trader absorbing extended payments terms meant that inflow of cash can be materially accelerated. Commercial advantage in terms of retaining control over its supplier network, generating the capacity to finance mid/long-term business expansion strategy in terms of market positioning
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