Top team: Mo and Steve
When a husband and wife team were looking to expand Kielder, their specialist automotive power tools business, they fully understood the critical importance of cashflow. Paying suppliers and staff while waiting to be paid themselves by some of the major resellers was the challenge; the solution was a tailored Invoice Finance facility from Optimum Finance.
Invoice Finance is a method of cashflow funding that uses receivables (invoices) as the principal asset against which money can be raised. Optimum Finance pays Kielder an agreed percentage of the invoice value as soon as it is submitted, driving access to liquidity at the point of invoice as opposed to needing to wait.
Mo Han, co-founder and Head of Purchasing at Kielder, says the benefit of Invoice Finance is that it releases cash into the business almost immediately, regardless of how long it takes a customer to finally pay: “Optimum advances 85% of the invoice value and that helps us not only pay our own people and our key suppliers, but also enables us to offer discounts on bulk orders to our key customers.
“With some of our customers requiring 60-day payment terms, it enables us to bridge the cashflow gap, and do so with what is effectively our own money. What’s especially good about it is that as we grow, so the amount of cash available to us also grows, and this will help us expand.”
High precision needs
The business was founded seven years ago to deliver very high-precision tools to the automotive market. Mo’s husband, Steve, a former Rally driver, saw a gap in the market that he felt was not being adequately served. He thus set to work designing his own range of power tools and associated products for professional mechanics, working closely with his Chinese partners. The result is a range of tools sold through specialist retailers and direct to the motorsport industry.
Early success and a good reception in the market has been hampered by Brexit, COVID-19, and the conflict in Ukraine. An international client base, however, enables Kielder to diversify risk, and the business manages Sterling, UD Dollar and Euro accounts, adding a layer of resilience to its trading arrangements.
Mo was already familiar with Invoice Finance, having previously used a similar facility provided by her main banking partner. A change in funding policy, however, obliged her to seek alternatives: “It was a concentration issue,” she explains. “Unfortunately, they reduced our accessibility to cash. Lack of cash restricted our growth and impacted our margin and profitability. It wasn’t sustainable and so we looked elsewhere.”
Among the providers Mo looked at was Optimum Finance: “Other providers were quite aggressive in their pricing but there were hidden costs. Optimum Finance was transparent in its pricing and offered good value. We also managed to forge a strong working relationship from the beginning. Customer service is of the highest level and our relationship manager, Jenn Bennett, is always quick to respond.”
Now the ambition is to grow the business further and increase market share: “We want to be known as the ‘go to’ in this space,” Mo concludes, “and build a brand known for the innovation, quality and design of its tools. Having Invoice Finance to support our cashflow helps me sleep at night.”