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Contents Top > 6.Finance Related Measures > Arrangement for Guaranteed Trade-Receivable-Backed Loans >
6 Finance Related MeasuresArrangement for Guaranteed Trade-Receivable-Backed Loans
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< Example 3 >
Case where subject company utilized long-term receivables as collateral and increased liquidity on hand, which resulted in a improved profit rate.
(1) Borrower company
(1) Company name: C company
(2) Capitalization: 40 million yen
(3) Employees: 45
(4) Line of business: wholesale of building materials
(5) Annual sales: 3,000 million yen
(6) Borrowed amount: Case-specific collateral for 20 million yen
 
(2) Third-party debtor(debtor client)
Construction company
 
(3) Perfection
Accepted
 
(4) Outline of business
C company, founded in 1975, sells building materials to construction companies. Although Company has solid customer bases, Company's constant headache is that sales fluctuate too much from month to month, and that receivables become collectible only at the end of the third months from sales.
 
(5) How this system was utilized
As receivables are collectible only in cash, there is no way to cash receivables, e.g. discounting of trade notes, until they become due and payable. Now that Company has utilized this system following the recommendation of its financial institution, Company could cash receivables earlier. The cashing increased liquidity on hand and enabled Company to shorten the period for payment to suppliers, and consequently to reduce unit prices of purchase and enhance the profit rate.

 

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