Stock Finance – What is it and How Could it be Beneficial to my SME?

Stock finance releases cash against your inventory that would otherwise be tied up as raw materials, work in progress or finished goods. According to Trade Finance Global Stock finance is a mechanism which releases working capital from stock such as finished goods or raw materials, which works by lenders purchasing stock from a seller on behalf of the buyer. Stock finance is different from invoice finance, and tends to be used as a 30-90 day revolving facility to enable access to cash as and when a business needs it.”

Businesses typically use stock finance as often they are not able to work with normal trade finance facility, ie where there is a buyer and seller. In effect, they will need to purchase and store stock. It allows you to release value from existing stock to improve your cash flow or funding position, which, in turn can allow you to realise new business opportunities or expansion. Here’s a brief summary of some of the advantages of this type of funding:

• Improve cash flow: Releases funds that would otherwise be tied up.
• Flexible: Helps businesses with seasonal fluctuations or high levels of stock.
• Matched funding: As your inventory increases your funding increases improving your cash flow.
• Invest: Use the funding to purchase more stock, invest in other areas of the business and fulfil commercial opportunities or minimise the cash absorbed in your business.

Here at SME funding UK we have access to well in excess of 200 lenders and funding sources and have helps a number of SMEs via the stock finance method. Our sources are ethical in nature and we take great pride in presenting the best deal for our clients with expert customer service at the heart of what we do. Having come from a finance background with nearly 30 years’ experience of banks, invoice financiers and independent funders we are very well connected within the business finance industry.

If you would like any further information, please do not hesitate to get in touch.

SME funding UK Ltd is Authorised and Regulated by the Financial Conduct Authority – FRN: 772970

We are a Member of the National Association of Finance Brokers (M/0122/16)

We are also registered with the Information Commissioner’s Office (ZA209808)

Please note SME funding UK Ltd are brokers and not a direct lender.