Flexible Finance Provides A Leap Forward For Expansion Plans
Skape uses Santander finance package to expand its portfolio
- Turnover: £5 million
- Sector: Transportation & Distribution
- Skape imports, markets and sells footwear to UK retailers on behalf of global brands like Irregular Choice and Poetic Licence.
- The company needed funding to expand. Its incumbent bank offered an inflexible overdraft of £400,000, limiting the company's options.
- Santander provided integrated trade and invoice finance, with funding through the cash flow cycle. Crucially, the funding is linked with the level of business, fuelling growth.
- The funding helped Skape raise turnover and acquire two new brands within a year.
Founded in 2004 by Mark and Angela Pearson, Skape imports shoes to the UK and sells to retailers, ranging from independent boutiques, department stores and large chains to international online traders. Using its expert knowledge of the UK market, the company provides overseas brands with a comprehensive distribution service, covering shipping, marketing and administration. It’s a successful model, but until banking with Santander, Skape’s growth potential was hampered by insufficient finance.
The help from Skape’s incumbent bank was limited to an overdraft, restricting the growth of the business. “An overdraft facility is just a snapshot of your requirement at any given time,” says Mark, Skape’s Managing Director. “It doesn’t provide flexibility when you have an upsurge in demand, or when an unplanned opportunity presents itself.”
A customer introduced Skape to Santander. The bank proposed an integrated solution comprising trade finance (to pay the supplier) and invoice finance (allowing the company to borrow against the value of invoices sent to customers). As Mark Heal of Santander’s Trade Finance Team explains, “The arrangement enables Skape to pay off the trade finance loans through cash generated by the invoice finance facility.” In addition, Santander provides a full banking service, covering receipts, payments and salaries, and the package’s initial ceiling of £700,000 was subsequently raised to £1 million.
It’s a flexible arrangement. Santander increased the sum available to enable Skape to buy in supplies in advance of the two-week Chinese New Year holiday, and the balance of available cash between invoice finance and trade finance funds has been recalibrated to suit Skape’s needs.
“We had an overdraft facility in place, but that didn’t give us the flexibility we needed to grow,” says Mark. “The funding we now have from Santander has helped us to make the transition from a small company with a turnover of around £2 million to a business with annual sales of £5 to £7 million.”
An expanded portfolio
The trade finance enables Skape to pay suppliers more efficiently – and that has an effect on pricing. “We also have confidence that we have the finance available to add new brands to our portfolio,” says Mark.
Since receiving funding in May 2012, Skape has added two new brands, contributing to a significant rise in turnover.
Mark says the company will continue to expand and investigate specialist areas of the market. With flexible funding already in place and Santander open to raising the sums available as the level of business rises, the company has the financial headroom for continued growth and success.
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Relationship Director Comments
From our perspective it’s a very attractive business, with all the products pre-sold to retailers ahead of orders from suppliers and with very good margins.