The credit crunch lands at my door.

Alan_M_2

Generali wrote: »

Do you extend credit to your customers? If so vectoring might help.

This is where we are unusual, or more to the point, this industry is unusual.

We don't give credit to our customers, we don't get credit from our suppliers. It's just how this particular side of the industry has always operated.

There are a handful of exceptions to the rule of huge established companies, but mainly stock is paid for before delivery in almost all cases. We finance it to get it into stock. It's why there are so few companies in this business, it's so difficult to finance.

Generali

Alan_M wrote: »

This is where we are unusual, or more to the point, this industry is unusual.

We don't give credit to our customers, we don't get credit from our suppliers. It's just how this particular side of the industry has always operated.

There are a handful of exceptions to the rule of huge established companies, but mainly stock is paid for before delivery in almost all cases. We finance it to get it into stock. It's why there are so few companies in this business, it's so difficult to finance.

Is there any way you could go bust and then buy up the stock very cheaply?

It's not a great way to do business but if you're going to go bust anyway....

Alan_M_2

Lotus-eater wrote: »

Can I ask about the restocking? You say business is slow, yet you need to restock. Is there anyway you can hold on until you get some more money from clients in? What would you normally be doing, have you not been paid by customers?
Sorry, its difficult to get a hold of what's going on in someone else's business.

Ideally that would be the answer, the problem is the lead time.

When I place an order, the stone is quarried, transported to the relevant factory, then processed to our requirements. That takes around 4-6 weeks, it's then loaded and shipped (from India) that takes 3 weeks of sailing then a week in port to clear and deliver.

So on average we see an order three months after it's placed, my orders now are for stock required in April/May.

What we can't do is fund the advanced stock requirements and pay down our lending facility at the same time, we can do one or the other.

Lotus-eater

Alan_M wrote: »

This is where we are unusual, or more to the point, this industry is unusual.

We don't give credit to our customers, we don't get credit from our suppliers. It's just how this particular side of the industry has always operated.

There are a handful of exceptions to the rule of huge established companies, but mainly stock is paid for before delivery in almost all cases. We finance it to get it into stock. It's why there are so few companies in this business, it's so difficult to finance.

Do you have to stock up to the £65 k? It seems to me that you may well be doing less business in the short to medium term. What do you think?

edit. OK I've seen the above now, that was my worst fear. I don't know tbh. Is that stock req in April/May, or do you just think it is? If you get a short term loan, will this sort your problems out, or the next time you come to restock are you going to be in the same situation?

Alan_M_2

Generali wrote: »

Is there any way you could go bust and then buy up the stock very cheaply?

It's not a great way to do business but if you're going to go bust anyway....

Despite being a Ltd company, all lending is secured on personal assets, otherwise that would have been option number one.

Alan_M_2

Lotus-eater wrote: »

Do you have to stock up to the £65 k? It seems to me that you may well be doing less business in the short to medium term. What do you think?

There are minimum volumes required to order to make the purchase cost per unit viable. £65K covers three containers of four colours of product.

Scaling down is not viable as the storage and lifiting equipment required cost a fixed amount, we then need to clear a minimum volume of product to cover this and stay profitable.

Dropping to two or one container would leave us with void periods where we are out of stock, that we cannot afford as not only do we have reduced sales but we also lose our hard won customers to other suppliers. Basically there is a minimum viable volume under which it's not financially sound to operate.

Really2

It sounds like banks or an investor are your only options then.

I suppose the only other is sell the business.

Alan_M_2

Lotus-eater wrote: »

edit. OK I've seen the above now, that was my worst fear. I don't know tbh. Is that stock req in April/May, or do you just think it is? If you get a short term loan, will this sort your problems out, or the next time you come to restock are you going to be in the same situation?

Everything is projected (apart from larger customer orders - that are self financing - we take deposits etc).

We have to guess what we'll be selling in 3-4 months time and buy appropriately.....in much the same way car producers build cars.

It's what makes us so difficult to finance.

Generali

TBH that's all I can think of.

There's Alan M's All You can Eat Granite Sale or something like that but I'm sure you've thought of the obvious move: cutting prices.

Times are hard and if it's any help, I'm suffering with you. Sometimes bad things happen to good people.

Alan_M_2

Really2 wrote: »

It sounds like banks or an investor are your only options then.

I suppose the only other is sell the business.

In my mind we either find an investor or someone willing to lend cash short term for a good return.

We could factor in a 10% fixed return on funds in 6 months, the lender would then be welcome to hold title on goods until paid and use out warehousing facility in which to store "His" goods....

Now is probably the last time I'd want to consider selling.

Any other (constructive) suggestions gratefully received.

We are not the only business in this industry facing this issue, there are some products unavailable due to financing issues nationwide.