Increasing production capacity with specialist finance
Industry: Food and drink
Product: Invoice discounting, Growth Guarantee Scheme and asset finance
Value: £5m
The client
This established drinks manufacturer started as a family-run ingredients supplier and has expanded the company to support customers through every stage of production.
Alongside supplying specialist ingredients, its services include product development, flavour matching, contract canning, bottling and packing for a range of alcoholic and non-alcoholic drinks.
This broad offering allows customers to access technical expertise and large-scale manufacturing services through one supplier. Continued investment in its facilities and equipment has enabled the company to increase production and respond to changing requirements across the sector.
The challenge
With demand growing, the firm wanted to broaden its services and create further revenue opportunities. However, its existing finance arrangement did not provide the flexibility or headroom required for the next stage of its plans.
The company needed finance on two fronts. It wanted to purchase a new packaging and wrapping line that would increase capacity and allow it to offer customers a wider choice of services. At the same time, it required more working capital to manage everyday costs as sales increased, including the timing gap between paying suppliers and receiving payment from customers.
The company needed a structure that could strengthen its immediate cash position while investing in its long-term production capabilities.
The solution
Close Brothers Invoice Finance worked with the company to understand how each part of its plans would affect cash flow and identify the most appropriate combination of finance.
A £5 million confidential invoice finance facility was put in place to provide ongoing working capital. Invoice finance allows a company to access an agreed percentage of the value of its unpaid customer invoices, rather than waiting for customers to settle them. The amount available increases as sales grow, making it particularly useful for businesses whose working capital requirements are rising.
The facility was accompanied by a top-up through the government-backed Growth Guarantee Scheme, increasing their headroom at an important stage in its expansion.
Working collaboratively with colleagues at Close Brothers Asset Finance meant they were able to refinance simultaneously, releasing value from existing machinery they owned. This was alongside a separate hire purchase agreement for the new packaging and wrapping line. Hire purchase allows a company to acquire equipment and spread the cost over an agreed period, rather than meeting the full expense upfront. This enabled the manufacturer to preserve cash for other operational needs while proceeding with the investment.
Bringing these elements together created a package suited to the company’s wider plans. Invoice finance provided liquidity linked to sales, while asset finance allowed the manufacturer to make better use of existing machinery and invest in additional capacity.
The result
With the new arrangements in place, the manufacturer had the financial headroom to move ahead with its expansion while continuing to meet its everyday commitments.
The packaging and wrapping line have increased capacity and the company has rolled out a broader range of services, helping it respond to customer demand and pursue new sources of income.
Meanwhile, the enhanced invoice finance facility has given the company greater access to the value of its unpaid invoices, providing additional flexibility as sales have increased without relying on a fixed level of working capital.
By considering the manufacturer’s immediate requirements alongside its longer-term ambitions, Close Brothers was able to implement a structure that supported both continued trading and investment in future growth.
