Ladders to Africa (...they have the snakes already!) (Published March 2006)
We fund complex transaction finance requirements as well as simpler needs. We like it when our introducer does not prequalify their enquiry but calls us to see what we might do. In this way we develop new ideas and move our business into new fields.
John Offord called us to introduce us to Russell Downer, trading as Thunderbolt and Franklin. Russell is a sole trader installing lightening protection devices. His suppliers grant only limited credit for his day-to-day business.
Russell sought to expand his business and had been tendering for various UN contracts in Africa. We got the call when he was about to secure a large contract from UNMIL, being the United Nations in Liberia, for scaffolding, ladders, and other products required for construction.
Glyn Powell, one of our Trade Finance Managers, has considerable experience working with the UN and other aid bodies in Africa. UNMIL provided a draft contract and we helped Russell negotiate terms that were theoretically safe for him and us. Backwards and forwards went the emails. The game of snakes and ladders seems a good analogy. But there was no escape from the main fact, Russell was sending goods to Africa on open account, to be inspected on arrival and paid for if satisfactory. Without Glyn's experience we could not do this safely.
"Russell is now confidently tendering for much more UN business and we have introduced him to several of our clients..."
Russell had a source for his products and we agreed 60-day payment terms with his supplier. If everything went smoothly we would not need to pay until the UN had paid us - a “facility” with out cash! Russell's margin was a bit tight, and we introduced him to a new lower-cost supplier who gave us the same credit.
But things moved in "Africa Time"; there were many delays – in shipping, unloading, inspection and payment – but we were eventually paid in full. We paid the supplier on time so this did not prove to be a cashless facility. Russell collected his profit just in time for his honeymoon.
Russell is now confidently tendering for much more UN business and we have introduced him to several of our clients whose products may be required by the many UN organisations around the world. Maybe the brilliant drillcorer, so necessary in parched Africa, will be next.
Written by David Ross Director
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the Article 'Ladders to Africa' at www.fairfaxgerrard.co.uk/docs/BusMon 0306 Ladders to Africa.pdf
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