Business finance for importers

The objective of the process is to provide short-term working capital finance to Buyers who import on a regular basis from China, Hong Kong or Taiwan. Generally these buyers are currently required to pay either by cash upfront or a mix of cash and Letters of Credit when purchasing from their suppliers (Sellers). For the Australian buyer it would be highly desirable to be able to have open account trading terms of between 30 & 90 days which will allow the buyer to:

• Match working capital.
• Self fund and not use other security.
• Utilise fixed asset bank security for expansion purposes

RISK:

As you will appreciate, the risk associated with open account short term working capital unsecured loans is whether the Buyer will be able to repay its loan amount within the agreed term. This is no different to the credit risks borne by any business when selling to another business on open account terms.

The type of Buyer to whom we extend credit, business finance, is one that:

• Is registered and conducts business in Australia or New Zealand. This would normally be a company as opposed to a sole trader or partnership, but could be a trust with a corporate trustee.
• Is purchasing working capital / inventory items. (No capital goods or fixed asset purchases)
• Purchases on a repetitive basis (at least every 2 to 3 months).
• Preferably has already been trading with its designated seller, without any significant claims, disputes or warranty issues.

The Sellers should:

• Be located in China, Hong Kong or Taiwan.
• Be manufacturers or distributors of goods (not services)
• Have the necessary business licence
• Have the necessary export license required by the Chinese authorities. Where the seller does not have an export licence, they must advise us of the details of their registered export agent. We would require a letter from the export agent confirming that they act in that capacity for the seller, and providing instructions to us of the bank account which funds must be transferred into.
• Preferably have already been trading with its designated buyer(s), without any significant claims, disputes or warranty issues.
• Have a repetitive trading relationship with this buyer in Australia.

BUSINESS FINANCE AND TYPE OF TRANSACTION:

The transaction must involve the transfer of ownership of goods. Each committed transaction must be complete and stand alone and not subject to:

• Sale or Return (SOR);
• Contract requirement for future delivery;
• Progress claims;
• Consignment;
• Progress Payments (it is acceptable for the payment terms to include a deposit on placing the order with the balance at a later date).

STANDARD REQUIREMENTS FOR BUSINESS FINANCE

Applications for all credit limits must meet the following standard requirements:

• Clear credit history on the business entity (D&B Company Extract);
• Clear credit history on the directors of the business (D&B Individual Bureau Enquiry), or in the case of sole proprietors and partnerships, the principals;
• The buyer’s business name, ABN and address can be confirmed via an independent third party source (e.g. white / yellow pages, credit report);
• BAS and other statutory taxation requirements have been paid up to date (ATO Integrated Account Statement);
• It is unacceptable if there is a charge on the assets of the buyer in favour of a shareholder, director or associated entity of the buyer or seller;
• It is unacceptable if there is a business relationship which is not conducted on an arms-length basis between the seller and the buyer (e.g. common shareholders, common directors etc);
• Comply with any other criteria set out by our insurers or financiers.

LIMIT-SPECIFIC REQUIREMENTS FOR BUSINESS FINANCE

In addition to the Standard Requirements above, there are specific requirements for the various levels of limits. This includes the review of aged receivables and payables, together with trading performance (as assessed using annual financial reports and management accounts). Depending on the size of limit that is requested, I can provide further information in relation to target performances and key information requirements for each specific level.

Should an applicant offer security to support an application, the application for a credit limit is assessed on a standalone basis, having regard to the financial position of the business and the type and value of security provided. Please note that the facility is designed to be unsecured in it’s pure form, however where the business structure involves multiple linked companies, it may be deemed prudent to link related trading companies within the facility via supporting guarantees.