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Bricks Import Leads to Bigger Things

This was a local, word-of-mouth referral. A great example of import purchase order finance, where the first import leads to bigger things.

The business imports building materials. They wanted to import a consignment of bricks from overseas but did not have the working capital available to fund the purchase, although they had a buyer lined up. We were able to adjust our standard invoice discounting model to become, in effect, a purchase order finance situation. What's the difference ? Well, in proper invoice discounting the service is already delivered, the goods have arrived, etc. We wouldn't normally fund against 'work in progress'. In this case, the goods hadn't even arrived in the country. However, we were very happy with the trustworthiness of our clients, who were happy to sign our back up documentation. We were also happy with the quality of the end customer, with whom they had dealt before. He was willing to sign the notice of sale, and agree to pay us, on condition that the goods turned up as ordered. So, we were funding on the strength of a purchase order rather than an invoice for completed work.

The great thing with this particular example is that with the funding model now in place, the company are looking to organise a big expansion of their operation, including organising bricks for an overseas location. As long as we are happy with the quality of the end customers and the paperwork supporting the sales, we should be able to stay with them.

Although in some senses it seems riskier to be involved with import/export scenarios, it seems to me that the paperwork you have to go through and the systems in place which govern international trade, make it seem more comfortable than some of the transactions we do where the client and the customer are both in New Zealand.

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