Cash is King
LIGHTHOUSE WORKING CAPITAL PROPOSAL
PROCESS OUTLINE
BUYING COMPANY negotiates credit terms with its suppliers, takes delivery and is invoiced in the normal way.
As BUYER approves invoices for payment (ideally within a few days) these are flagged on the Lighthouse on-line platform.
Suppliers can see which of their invoices have been approved and can immediately apply for early payment. The Lighthouse platform calculates the early payment fee and, once accepted, makes the payment to the supplier. Suppliers can choose early payment without obligation for any or all approved invoices whenever they wish.
BUYER pays on the agreed due date (NOT THE EARY DATE) and will not be aware which suppliers avail of early payment. This bridge finance is provided by Lighthouse.
BUYER decides which suppliers can avail of the scheme and can exclude a supplier as they wish.
BENEFITS TO BUYER
· Provides an opportunity to renegotiate / extend credit terms with suppliers thereby improving working capital;
· No cost to BUYER:
o Access to the Lighthouse network is free of charge, fully automated, interfaces with existing ERP systems and should not increase administration;
o Finance costs for early payments are paid by suppliers if they choose to take that option;
· No impact on BUYER balance sheet or liabilities other than the benefit of renegotiated / extended credit terms.
BENEFITS TO SUPPLIERS
· Provides opportunity to receive payment for invoices as soon as they are approved for payment by BUYER less the early payment fee;
· The cost of the early payment fee will be calculated and shown up front so that the supplier can make a fully informed decision;
· The cost of the early payment is typically 50% of commercial overdraft charges which should make the scheme very attractive to improve cash flow and save bank interest costs
· Additional savings potential including: lower cost than factoring, credit insurance not required, additional source of working capital, reduced personal guarantees to banks, etc.