UPS Capital, a subsidiary of logistics specialist UPS Inc, has expanded its UPS Capital Cargo Finance service with new options to provide US importers with greater liquidity on in-transit cargo.
The offer now increases the amount a business can borrow from 70% of the supplier’s commercial invoice to 100%.
Other enhancements include: repayment terms up to 90 days rather than 75 days; an unsecured credit line that won’t interfere with existing banking relationships; and more competitive interest rates for eligible companies shipping with UPS.
“These enhancements effectively increase liquidity to support the growth of small and mid-sized businesses,” says Mark Robinson, president of UPS Capital. “They are designed to accelerate cash flow so companies can have more working capital to invest in their businesses.”
The solution is designed to offer significant help for importers who rely on a strong cash flow to stay in business. According to a US bank study, 82% of businesses fail due to poor cash flow.
Local banks generally don’t offer credit lines on in-transit inventory, making it difficult for small importers to find the cash they need. UPS says it is offering much-needed financial flexibility to businesses that have substantial resources tied-up inside ocean-going vessels or other slower modes of transport.
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By GlobalData“UPS Capital’s cargo financing solution is a creative way to virtually eliminate the risk of paying a supplier before the goods are sold,” adds Robinson. “Now our customers can order more supplies, more effectively manage their payable obligations and handle more inventory without hesitation while goods are in motion. Our customers have been asking for this additional solution to augment our other insurance and financing products for small and medium size companies.”
The UPS Capital Cargo Finance service can provide unsecured credit lines from US$300,000 to $1.5m to pre-approved borrowers. After UPS Capital confirms the supplier invoice and the shipment has left the point of origin, funds are disbursed to the US importer, UPS Capital’s customer. These businesses are then able to use the funds to purchase more inventory, pay suppliers earlier at better terms, and to invest in their business.
