Cases · Case detail
How a young manufacturer grew without a track record in the accounts
A manufacturer of driver seats for lorries and forklifts grew every year, but came unstuck at the bank on its short track record. Factoring from SOOF Finance brought a line that moves with the invoicing. A large order is no longer a liquidity question.
The situation
Growth every year, tighter every year
The business makes electrically adjustable driver seats for work vehicles. The seats go to transport firms, logistics providers and machine builders. A typical profile for manufacturing and industry. Part of it runs through dealers who include the seat in their own quotation.
The orders grew larger. A fleet does not order a single seat, but a batch. That is exactly where it started to pinch.
"On an order of ten seats I buy in components first and build them up," Sander says. "I deliver, I invoice, and then I wait sixty days. During that time my money is sitting in someone else's fleet."
With a handful of orders a year that is manageable. With growth it stacks up. Sell more and you pre-fund more.
"The odd thing is that growth costs you liquidity before it earns you anything. You are successful and you have less room than the year before."
The bank could do little with that. "They look at your track record, and ours was short. The fact that we grew hard every year barely counted. For a young business that is a difficult message."
The approach
Assessed on receivables instead of on history
A fellow business owner pointed him towards factoring. "There are plenty of providers and the terms differ enormously. I did not know where to start."
In the first conversation with SOOF Finance it was about his receivables straight away. "No sales pitch. Pointed questions about who my customers are and how they pay. That is a very different conversation from the one with the bank."
How it works
With factoring, SOOF assessed the full receivables book and agreed an advance rate up front. He submits his invoices, SOOF pays out a large part of them straight away, and his customer pays later on their own term.
The difference with a facility is in how it grows. The line has no fixed ceiling, but scales with what he invoices. A larger order automatically means more headroom.
"That is the point of it for me. I do not have to renegotiate when a batch of thirty seats comes along."
Because part of the turnover runs through dealers, a sizeable share of the book sits with a few customers. That concentration was discussed in advance and worked through per customer, so that he knew where he stood before he signed.
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.
Sander
Mede-eigenaar van een fabrikant van voertuigstoelen, regio Gelderland
"I can now say yes to an order without checking my bank balance first. That sounds small, but it changes how you run a business."
"What stayed with me most is how quickly they move. Short lines, and someone who understands how a manufacturing business works."
"We are still growing every year. The difference is that the finance now grows with us instead of lagging behind."
Frequently asked questions
Yes. SOOF assesses your receivables book and not only your track record. For a young business growing fast in particular, that is the difference from a bank facility.
Then we discuss that in advance. We assess your book per customer and agree a suitable advance rate on that basis, so that you know where you stand before you sign.
Yes. Your clients pay with a SOOF payment reference. In transport, logistics and industry, factoring is common, so in practice that rarely causes objections.
Yes. If your capital sits both in invoices and in stock, the combination is stronger than either one. You still keep 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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