Cases · Case detail
How a car wholesaler turned its rolling stock into cash
A wholesaler in nearly new premium cars saw its working capital standing still on the motorway for weeks. The cars were paid for at the supplier and not yet invoiced to the buyer. With advances from SOOF Finance, more stock is now on the road at once, without the cashflow seizing up.
The situation
Your money is sitting on a transporter
The business buys new and very nearly new cars across Europe and sells them to independent motor dealers. Buying across the border brings its own credit risk with it. No private buyers, trade only. The segment runs from around twenty-five thousand to well over a hundred thousand euros per car.
That makes every car a sizeable piece of working capital, exactly the pattern of wholesale and distribution. And that capital stands still longest at the moment when nothing is happening: during transport.
"You buy abroad, you pay, and then the car is yours," Dennis says. "It is on a transporter somewhere between Germany and the Netherlands. Not yet delivered, so not yet invoiced. Meanwhile my money is in it."
With ten cars on the road at once you are quickly talking about half a million doing nothing. "That is the amount I could have bought the next batch with."
So the brake was not on the selling. "We had the demand and we had the buying channels. What we did not have was the room to have more on the road at the same time."
A bank offered no way out. The company is young and has no years of figures to put on the table.
The approach
Funding what is on the road
In trade like this, SOOF Finance looks not at last year's balance sheet but at what is in the chain now. Vehicles on their way to their final destination are advanced against, so that the capital does not stand still while the car is moving. That is inventory finance applied to trade in transit.
"The first conversation was about how our chain works straight away. When do you pay, when do you deliver, when do you invoice. There was understanding right there."
How it works
The finance follows the rhythm of the trade. On purchase, headroom is freed up. On delivery and invoicing, the circle closes. The advance rate was agreed in advance and the cost overview was on the table before anything was signed.
Because the business runs its own transport, the lead time from purchase to delivery is short. Within the Netherlands often a working day, within Europe usually ten days. The shorter that period, the faster the working capital comes back.
"We worked it through together on our own numbers. Not on an example, but on what we actually did last year."
The combination does the work: advances on the stock in transit, and factoring on the invoices to the motor dealers. One party, one overview.
The results
ReviewsReviews
What others say
Through working with SOOF, we are strong in more than just foundation work.
The onboarding was well organised. A simple process with fast payment.
We are very satisfied with what they offer, the way they work and the speed of payment. On top of that they think along with us actively and are always easy to reach. The contact is pleasant and professional.
We grow seriously every year, but finding suitable finance for a young business turned out to be hard. From the first contact with SOOF: short lines, pointed questions, quick to move. My feeling straight away was that they understand entrepreneurs here.
SOOF responds to the growing capital need in automotive. Vehicles on their way to their final destination are advanced against efficiently, so that we keep enough working capital to keep growing. Short lines, quick decisions, and a relationship that goes further than the transaction.
Dennis
Directeur van een B2B-groothandel in premiumvoertuigen, regio West-Brabant
"SOOF responds to the growing capital need in automotive. Vehicles in transit are advanced against efficiently, so that we keep enough working capital to keep growing."
"Short lines and quick decisions. In this trade a week counts, sometimes a day. A party that needs three weeks to assess something is no use to me."
"And it goes further than the transaction. They think along about how we tackle next year, not only about this batch of cars."
Frequently asked questions
Yes. We look at what is actually in your chain, even when it is not yet on your premises. For trade with short lead times and high value per unit, that is often where the most headroom is freed up.
We assess the value on the basis of your purchasing and your deliveries, and review it periodically. We agree the arrangement in advance, including the advance rate.
Yes. We assess your trade and your receivables, not only your history in the accounts. For young trading businesses that is often precisely the difference from a bank.
Yes, and in this situation that is also the strongest set-up. The stock side and the receivables side then run through one party, with one point of contact and one overview. The trade-off between the forms is set out in which type of finance fits you.
The situations in our cases come from our own practice. We publish them anonymised: names, companies, amounts and other details have been changed, so that a case cannot be traced back to an individual client. Working capital is client data, and we keep that confidential. A case describes one situation and says nothing about the outcome in your case.
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