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1 Supplier trade finance for the Irish SME sector John Power Head of Business Development

2 Agenda Trade finance market in Ireland What is supplier trade finance What can be offered to International firms Case studies Who are the TTFI Summary

3 Trade finance market Until 2008, over 80% of SME working capital finance provided by banks Credit crisis massive contraction in overall credit Banks Basel III SME working capital finance most severely affected Emergence of non-bank trade financing facilities Becoming a growing, vital and integral source of finance Most common forms sales finance (invoice discounting, factoring) Less well known purchase finance (or supplier finance)

4 Supplier trade finance Starting point for trade finance Options Reserves Open account Bank trade finance Non bank supplier trade finance Provides finance to pay your suppliers Occurs prior to selling and invoicing your customer Finance is provided on a trade basis, not on open account as provided by many banks Finance is provided on a trade by trade basis, therefore does not impact on the SME s cashflow. Various options for providing finance most suitable structure

5 Process Purchase-to-Pay Process (P2P) Order-to-Cash Process (O2C) Supplier Customer (SME) Buyer Purchase Finance Sales Finance Tower Trade Finance (Ireland) Ltd. Sales Finance Invoice Discounting, Factoring etc. Trade Finance

6 Trade Types Direct Trade Finance Assesses the client solely The appraisal is based on the strength of the client and the merits of the particular trade The finance is usually advanced directly to the clients suppliers. Traditional Trade finance Indirect Trade Finance In circumstances where a client does not meet the criteria. alternative solution. The client may not qualify for trade finance directly, however the particular trade is very attractive and the underlying customer is very strong Partner with the client, pays the suppliers, import the goods and deliver to customer Take an assignment of the invoice. Upon settlement finance firm receive the full payment(capital advanced plus our margin is deducted) The balance is paid over to our client. In these arrangements, the credit risk is no longer with our client.

7 Why Choose supplier trade finance A flexible, affordable, robust and efficient solution for providing trading finance for growing SMEs. Finance is in the form of debt, therefore SME s do not have to forgo expensive equity in order to grow. The solution does not affect the cash flow of SME s nor does it affect existing arrangements you may have with your bank or invoice discounter No large upfront administration fees, late payment fees etc. making it a completely transparent solution. Quick underwriting and decision-making process Ideal for expanding firms

8 Trade types While Finance criteria is generally non prescriptive, there are certain transactions that may be difficult to finance. These include Trades in Fresh produce, livestock or perishable goods Certain fashion items Services In general, supplier trade finance is on physical items that are non perishable and not fashion dependent. Incorporated businesses and not sole traders or partnerships

9 Tower Trade Finance (Ireland) Ltd. Part of the Tower Trade Group global trade finance company that specialises in supplier finance TTFI currently appraising new applications from Irish firms Consider transactions in excess of 50K Cash to cash cycle - not more than 90 days Margin greater that 12% No perishables or fashionable items Direct or indirect trade finance Appraise on the merits of the particular trade TTFI does not displace or impinge on your existing finance providers but rather compliments them

10 Summary Tower Trade Finance (Ireland) Ltd. Supplier trade finance Open for business If you have queries contact John Power, Tower Trade Finance (Ireland) Ltd or Thank You