Faced with tough business conditions, many New Zealand small and mid-sized enterprises are considering how to secure import stock or inventories ahead of what, for many, is the busiest time of the year – the festive season. Here’s why Trade Finance might be the best solution for your business. 

Economic uncertainties abound

These days, planning for the summer season is not as simple as it might have been before. 

Firstly, it appears to be coming earlier and earlier. It starts with one of the biggest retail sale days, Black Friday, which will take place on 29 November 2024. As noted by PriceSpy, Black Friday has grown into a longer sales period than previously with discounts being marked down from early November onwards. 

It’s also not certain what kind of festive season we will have this year. MYOB data, released in April, reveals that despite ongoing cost pressures, 37% of New Zealand’s business owners and operators believe the local economy will improve over the coming year. Just over one in five (22%) expect it to remain the same but 40% say it will decline.  

Added to this, consumer confidence remains sluggish, with an ANZ-Roy Morgan index showing that it eased two points in June. At 83, confidence is miles below the 20-year average of 114.  

The uncertainty makes it hard for businesses to calculate demand and plan for what they need to buy, produce or import to have sufficient inventory ready.  

Getting inventory management wrong can affect your cash flow. It could mean that cash is locked up in unsold inventory, limiting your ability to invest in growing your business. It can also leave your business unable to meet financial commitments as they fall due. Importantly, you could also disappoint customers by being unable to meet their needs. 

The secret ingredient to inventory success

A good plan can help you to avoid inventory problems. You can develop this by first determining how much to order. This involves analysing your sales history, emerging trends and upcoming events like promotions.  

Success requires an effective system to monitor your stock levels and movements, having adequate storage available and assessing how much backup or safety stock you need of items or materials that sell out fast. 

Another step is to determine when to place orders. This requires understanding how factors such as supplier lead times and availability of raw materials affect your supply chain.  

Also crucial is how you will pay for the order, any additional costs associated with orders and the effect of these on your cash flow. 

The benefits of trade finance for businesses

We all know cash flow can be a headache for businesses. Trade Finance is one effective way to ease your cash flow challenges. It provides you with fast funding to buy the stock, inventory and raw materials you need from domestic and international suppliers. It helps you boost your purchasing power and provides supply chain security.  

Trade Finance also helps mitigate the political, economic, transport or trade risks associated with international purchases in several ways, including by insuring your investment and insulating yourself from financial exposure. 

Trade Finance involves obtaining a revolving line of credit to pay suppliers in almost any currency via telegraphic transfer, Letters of Credit or Documents Against Payment. Alternatively, you can use it to fund finished goods together with an Invoice Finance facility for an end-to-end funding solution and cover cash flow gaps for up to 150 days. 

Finding a Trade Finance solution to suit your business

Looking for a funding solution to suit your unique import/export needs can be challenging. For a business owner, the three most important things to consider are speed, flexibility and the product’s fees, terms and conditions. Do your research and choose carefully to ensure you’re making the right decision for your business.  

Trade Finance with ScotPac

ScotPac has been helping New Zealand import-export businesses bridge cash flow gaps and navigate upfront payments and tricky import terms with customisable Trade Finance solutions for decades. Our Trade Finance facility is more affordable than overdrafts or credit cards and offers businesses the option to fund inventory or raw materials locally or from overseas.  

Other benefits include:  

  • Enjoy up to 150-day terms, funding up to 100% of the order value.
  • No term and no minimum monthly fees.
  • Generally, no property security required.
  • Flexible facility to fund the stock holding period for B2B or B2C sales.

To find out more about our Trade Finance solutions or to discuss your goals for your business, get in touch with your local ScotPac office today.