Inventory financing

Add value to your stocks and have new sources of financing

Chetwode (in partnership with ACTENE), supports you throughout your financing project, from stock valuation to investor relations to arranging financing.

1. What is inventory financing ?

Is your business growing rapidly and do you need additional financing? You already have bank loans and need additional resources?

First of all, inventory financing is an alternative to traditional bank financing and can easily and quickly meet your financial needs. A company’s stock is an asset that is often not taken into account in the context of financing. However, stock is a concrete resource that can be used immediately.

Moreover, inventory financing is a method of transforming a company’s inventory into financing: the inventory is then presented as collateral and the company benefits from new financial resources.

Using the stock as collateral  can therefore assist a company’s growth. The value of the stock being preserved throughout the duration of the financing reassures and gives confidence to potential lenders and can facilitate fund raising.

2. How inventory financing works ?

Its principle

Inventory financing opens credit by pledging inventory as collateral to creditors.

The need for financing on stocks

It can be used for medium or long term credit but also for bond financing.

The profile of the beneficiary companies

Companies that can use inventory financing are: industrial or trading companies, whose future EBITDA is sufficient to cover current and future liabilities.

The investors

  • Commercial banks

In most cases, it is the banks that practice inventory financing. Alone or in combination, banks use the stock to secure short- or medium-term loans.

  • Private investors

Private investors can also be the funders of inventory financing. Indeed, Chetwode’s specialised debt fund partners are able to provide significant amounts of inventory financing (typically EUR 5 to 50 million).

Inventory financing costs

Stock financing can generate two types of costs:

  • Direct costs (cost of financing, cost of the third party manager/auditor, annual fees, ancillary fees, etc.)
  • And indirect costs (including human costs)

3. Chetwode's inventory financing

In-depth knowledge of company assets

Since its creation in  2003, Chetwode has demonstrated its in-depth knowledge of corporate assets and has specialised in inventory financing in addition to its original expertise in equipment and production tools. In conjunction with ACTENE, a consultancy firm specialising in inventory mobilisation, Chetwode structures inventory financing in complex or multi-jurisdictional situations.

Our inventory financing offer

The aspiration of Chetwode and ACTENE is to assist companies in their inventory financing project and to provide comfort to future creditors.

With this in mind, we propose to structure loans secured by a trust (more properly a fiducie) or a possessory pledge.

Firstly, in the case of a fiducie trust , the inventory is the collateral. If the trust agreement is not respected, the creditor can offer the stock for sale, an aspect which will have been considered beforehand.

Secondly, in the case of a possessory pledge, Chetwode can also buy back a company’s stock via its subsidiary Chetwode Inventory Services.

The stages of the financing project

Firstly, the selection of the most profitable stock to be mobilised in the company

Then, the study of the different types of financing structure most advantageous to the company

Next, drafting a proposal for investors highlighting the benefits and importance of mobilising your stock

Then, the choice of invesors most likely to correspond to and appreciate the project and ensuing negotiation

And finally, the implementation of the project and the monitoring of stocks.

The amount and duration of funding

The amount of funding is a minimum of €5M. The collateral value of the stocks will be higher, the level being determined by an expert appraisal of the stocks.

A first approximative approach can be made on the basis of a documentary or desktop study, which can then be completed by a site visit.

The maturity of the financing is 3 to 7 years with the possibility of deferring repayment in certain cases.

The location of the beneficiary companies

Companies located in France, Belgium, Spain, the Netherlands, Germany or Italy can benefit.

Meet ou teams

“When two forces are joined, their effectiveness is doubled” – Isaac Newton

Why use stock financing ?

Our experts work on analyses (financial estimates, data queries, etc.), as well as on administration (creation of documents, etc.), through to the implementation of the project and monitoring of the stocks.

Our goal is to understand your financing needs and the advantages presented by your stocks, to select the most advantageous benefits for the  chosen investors and negotiate the best financing for your company.

Financing a growth project

We created a pledge on stocks of finished products on behalf of a producer of single-use paper. The objective was to offer it as a guarantee for alternative financial partners (debt funds) who were thus able to provide the funds for the company’s development.

Financing a bridge

A family business was short of cash as it was undergoing significant growth in its industry. The objective was to create a temporary cash flow before the arrival of a future shareholder. We arranged a bridge over a 6-month period.

Financing a seasonal operation

A manufacturer of winter sports equipment was selling its products between September and February and required out of season cashflowWe set up an inventory credit plan.

Negotiate longer payment times for suppliers

A meat processing company wanted to obtain an extension of its payment term from its supplier. We developed a receivables solution on the finished products.

Financing a residual stock in run-off

A major retailer sold part of its network. It was looking to sell off the residual stock of food products in the divested shops. We set up a control and purchase arrangement of these stocks as part of run-off management programme.

financement sur stocks