How to find the right trade finance broker

February/March 2016

Dynamic Export Magazine

Jalil Wakim of Lendfin shares his tips for choosing the right trade finance broker…

Whether you’re a wholesaler, distributor, importer or exporter, you have value that can be unlocked from your working capital.

Unlocking this value, however, requires partnering with a finance broker who has the ability to assess your organisation’s position holistically.

It can be easy to focus on individual transactions, or to only consider the product in isolation.

However, an expert finance broker will assess your entire position from a range of angles and contexts. They will understand that your cash flow position can alter as a result of many different factors, and will take these factors into consideration when connecting you with the best financier for your business.

Below are the three key factors your finance broker should account for when organising your finance.

  1. Your business model

Your business model largely determines the volume and timing of your cash flow. For this reason, it’s crucial your finance broker understands what makes your business tick. They need to be aware of your competitive positioning in your industry, and be familiar with your short, medium, and long-term strategic objectives.

Only a broker who understands your business model intimately is able to place you with the financier that will best serve your current and future finance needs.

  1. The seasonal factors that impact sales

Seasonal factors can represent periods of risk (and opportunity) for your business. So understanding the way seasonal factors can impact your cash flow and funding needs can strongly impact the type of financier that will achieve the best outcome for you.

Businesses that sell products in great demand during the Christmas season, as an example, may need additional funding in the lead-up to this period. Those who sell items affected by temperature, such as short vs. long-sleeved clothing, will also have varying finance needs.

Though these examples may be fairly obvious, your product may possess less noticeable seasonal considerations that could still impact your cash flow significantly. It’s the broker’s job to address these seasonal factors up front to ensure your seasonal funding needs are established as part of any funding package with a financier.

  1. Your trade cycles

Trade cycles are the alternating periods of growth and contraction experienced within the broad economy. They can impact a large range of factors, including production levels, pricing, consumption, investment, interest rates and employment levels.

Though they are wide-ranging, they can impact individual businesses differently, and your finance broker must be aware of how your business might be affected. Because they don’t occur with predictable regularity, a really great broker will reassess this aspect of your finances every few years to account for any potential shifts, and adjust your financial strategy accordingly. They will understand which sectors are likely to be affected most at any given point, and recommend finance that takes this into account.

Jalil Wakim is the Founding Director of Lendfin (www.lendfin.com.au), a leading independent finance broker specializing in consumer, commercial, trade, and professional financial solutions.