Stock Finance

 

A line of revolving credit is set-up based on the level of finished goods available. The amount is expressed as a percentage of their value based on the cost price. If the goods are pre-sold, made to order, then the line of credit available can be a higher percentage.

 

Raw materials and WIP are not normally taken into consideration when establishing a line of credit and calculating the availability of funds due mainly to ‘Retention of Title’ issues. However, if a company can satisfy underwriters there are no ROT issues then some lenders will offer additional funding against the value of raw materials and increase the line of credit.

 

Allowances are also made in the size of a credit line for crown debts.