Finetrading creates liquidity
Definitely yes! In principle, the days of restrictive lending in Germany are over, and companies with strong credit ratings in particular are currently generally able to obtain loans without any problems. Nevertheless, many SMEs are forced to broaden their financing due to rating requirements. These companies have become highly professionalized in recent years and have recognized the value of diversified financing. In this context, they appreciate the contribution of alternative sources of liquidity such as finetrading, especially since we are very close to our customers’ requirements and offer them tailored solutions. For example, finetrading is increasingly being used to outsource inventory.
In contrast to classic finetrading for the purchase of goods, “finetrading for consignment warehouses” enables suppliers to convert their deliveries to a consignment warehouse into immediate liquidity and thus optimize their working capital. Corporations in particular expect their suppliers to maintain 100 percent stock levels so that they can meet their delivery obligations at all times. At a time when the Schengen Agreement, and with it the reliability of supply chains, is being called into question, the issue of supply security naturally takes on an additional explosive nature. With our offer we provide a market-driven solution for these challenges with a possible balance sheet effect.
The best way to explain this is with a concrete example. A company in the agricultural sector is offered seed at favorable conditions in winter because it is out of season. Since planting will not take place until next spring, must be stored. Through the interposition of WCF, the seed supplier benefits, because the latter reduces its stock on the supposed balance sheet date of 12/31. Another positive aspect for the customer is the immediate payment of the invoice by the finetrader in the old balance sheet year, i.e. the customer enters the new year with no outstanding receivables.
The agricultural company even benefits twice: By involving WCF, the company strengthens its negotiating position, because the argument of acceptance and payment of the supplier in the old balance year by the Finetrader enables discounts and winter rebates. With the WCF storage solution, the ordered seed is then delivered to a WCF consignment warehouse (typically in close proximity to the customer’s actual warehouse or directly on the customer’s premises) where it remains untouched. Only when the seeds are sown — and our customer from the agricultural sector is also flexible in this respect and can depend on the weather — is the product removed from the warehouse and the Finetrader issues the invoice when it is removed. The agricultural company thus secured the favorable conditions in the old financial year, yet did not build up any additional inventory and gave itself more financial leeway thanks to the option of the long payment term. This is a win-win situation for both the supplier and the customer. However, companies must note that the final assessment in this regard is always made by the respective auditor.
About WCF Finetrading GmbH
WCF Finetrading is Germany’s first finetrading service provider. Since 2003, WCF Finetrading has been offering bank-independent solutions for the optimization of working capital to medium-sized companies. More than 2,000 companies — across all industries and size categories — use Finetrading to date. “We ensure that medium-sized companies remain liquid both during purchasing peaks and growth phases. Whether it’s purchasing goods, storing goods or project business — thanks to finetrading, our customers can access the previously often unused cash discount.”
The total of WCF-approved purchase lines is currently in the hundreds of millions of dollars. Its clientele includes medium-sized companies from all sectors with sales of between one million and six billion euros. The annual purchasing volumes of these companies range from 250,000 euros to 25 million euros.