Next month, many factories in China will close for up to four weeks in celebration of the New Year that begins on 16 February 2018 –posing massive problems for many small to mid-sized retailers and importers who must ensure that their spring season merchandise is produced, paid for and shipped prior to the shutdown.
In particular, there is the financial burden of Chinese-based manufacturers demanding payment upfront, since it is not realistic for importers to lay out significant sums of money to purchase goods that won’t be available for as long as six months.
For fast-growing wholesaler Dear John Denim Inc, turning to trade finance provider White Oak Commercial Finance (WOCF) helps it to pay its suppliers in a timely fashion.
Indeed, an increase in its line of credit to pay its suppliers is critical for the company to prepare for its busiest seasons: spring and summer.
“We recognise the potential issues that the Chinese New Year factory shutdown can pose for small and mid-sized businesses,” explains Robert Grbic, president and chief executive officer of WOCF.
“Seasonally accelerated payments to vendors can strain an importer’s liquidity. We understand these needs and have the products and staff to provide flexibility and creative solutions for those companies that buy goods directly from Chinese suppliers.”
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By GlobalDataVincent Yeung, president of Dear John Denim, adds: “This is the second year that WOCF has supported us during the Chinese New Year period. Without their support, there is no way we could ensure that our merchandise would reach the US in time.”
He adds the partnership “has been critical in supporting us through seasonal periods like this, as well as providing us the working capital we need daily to help fuel our growth.”
Formerly Capital Business Credit, WOCF was acquired by White Oak Global Advisors in 2016. It services include full-service factoring, invoice discounting, supply chain financing, inventory financing, US import/export financing, trade credit risk management, account receivables management and credit and collections support.
In a factoring arrangement, a provider purchases the accounts receivable and provides a cash advance to a business as a percentage (that can range from 70-95%) of their accounts receivable and the balance, minus the factoring fee, once the invoice has been settled.
In an invoice discounting arrangement, a provider provides a revolving line of finance to a business, calculated as a percentage of their accounts receivable.
