Access to finance has been a perennial problem for small and medium-sized businesses throughout the UK for a number of years. However, for businesses at the top end of that scale, securing big funding facilities has often been even trickier.
Turtle Wax and Ripmax are two businesses with well-established client bases but desires to expand. Based in Liverpool, Turtle Wax produces car care products and has a turnover of ?18.3m. Meanwhile, Ripmax has its base in Enfield, from where its distribution of gadgets and gizmos, generate revenues of ?12m.
Growth across the EMEA region (Europe, the Middle East and Africa) was desired by Turtle Wax, which would allow it to double turnover within five years to ?30m. The business knew that it would not be able to do this without a new capital injection, and so looked beyond the banks to a specialist trade and working capital funding provider.
Mark Brickhill, EMEA president for Turtle Wax, explained: ?We have ambitious plans to grow throughout the EMEA region and required a finance partner that not only understood the history and seasonality of our business, but that could also support our expansion plans for the future.?
The company was successful in securing a ?6m funding facility from independent funder Bibby Financial Services? Corporate Finance team ? which included a ?4m invoice discounting agreement on top of ?2m stock and trade finance. ?
Going forward, Turtle Wax wants to derive 85 per cent of revenues from exporting. ?With funding and support in place, we?re in a fantastic position to grow our business in the UK and abroad,? Brickhill added.
Its EMEA expansion will be spearheaded by two new product lines: Perfect Finish, for car enthusiasts; and Essentials, for new and young drivers.
Having relocated its sales and marketing team to a business park in Liverpool in 2014, where its new EMEA headquarters will reside, Turtle Wax and Brickhill believe that strong growth in its 90-strong base of country markets can be achieved.
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Cash flow conundrum
With imports coming in from Japan, China and the Far East, Ripmax was in a situation where it had to manage cash flow very carefully. It was by securing exclusive distribution rights to supply Futaba radio control products throughout Europe that it realised a new funding facility was required.
The deal is set to allow the South East of England-based business to double turnover in the next year and a half, but to keep up with demand and deliver on new markets a little pressure needed to be taken off payments.
A ?4m funding arrangement from Bibby, made up of invoice discounting and trade finance, was closed to help close the company?s cash flow gap.
Nick Moss, managing director at Ripmax, said: ?As we have grown our business we have had to become more creative with our cash flow. On the one side, when importing goods, we often find ourselves paying for them before they arrive in the UK. On the other side, when selling our products to retailers, it often takes up to 60 days to receive payment. This leaves a gap in our working capital.
?Ripmax has been on a real growth journey in the last couple of years following its acquisition of Amerang in 2013. We have recently secured exclusive European distribution rights for Futaba radio control products which are going to grow the business considerably. This deal will significantly increase our revenues in the European market.??
Explaining why his business also went to a specialist trade and working capital funding provider, Moss said it was about finding a pairing that worked with Ripmax?s position as a growing and ambitious business. His funding partner offers both expertise in structuring working capital solutions and flexibility in relation to the amount of funding he wants access to.
Ripmax is in a position where many of its suppliers require cash up front before products are dispatched. Unlike in the UK where these kind of transactions would be supported by credit terms, a combination of invoice discounting and trade finance is crucial to ensure the two flows of cash meet in the middle.
Both businesses analysed growth opportunities and came to the conclusion that a new funding line was required. However, it is the flexible nature of the deals, bringing together systems such as invoice discounting and stock/trade finance, that will allow the management teams of each to dial up or dial down capital requirements as they arise.
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