Financing advice in a growth market
“What differentiates GFL is their competent advice from one company to another and the integration between the individual areas.” Marco Göbel, Ex-Trade
The business originally started with the sale of video games. Then, quite early on Ex-Trade GmbH & Co. KG decided to shift the business into the electronic cigarettes market and is now a successful company in this rapidly growing area. Ex-Trade supplies retailers with liquids and e-cigarettes as well as running its own retail outlets.
Managing partner, Marco Göbel, is very careful about the quality of the liquid used by Ex-Trade in order to ensure that fatalities, such as those that have occurred in the USA, can be prevented. In addition, the company stands out due to the professional technology structures applied to its processes.
Payment terms instead of advance payments
Rapid growth of the company combined with the young, specific customer structure and increasing competition has quickly lead to significant challenges. While initially invoices were immediately settled, Ex-Trade now increasingly needs to grant payment terms in order to keep up with its market competitors. In the first instance that was only possible within the limits of their financial scope.
Given that the options of using advance payments were becoming less and less, the management decided to bring in GFL to review the debt management processes. As well as this, the accounting department’s workload had increased due to rapid growth. They had to issue, post and send reminders for ever increasing amounts of invoices and in some cases follow up on them. Moreover, there was a question of whether orders should even be accepted if the customer hadn’t paid on time for previously supplied goods. It was deemed necessary to set up control guidelines by introducing more structure into the accounting department.
Added to this, Marco Göbel was selling more and more goods directly to the end customer through the company’s own retail outlets. Although that ultimately lead to further growth, it also resulted in additional challenges as the retail outlets clearly had to be financed by Ex-Trade.
Professional debt management
Firstly, GFL’s experts reviewed the processes, analysed the Days sales outstanding (DSO) and then, over the course of time, were able to implement more professional debt management by using information and debt collection solutions as well as by introducing credit insurance. Any growth issues – in the meantime the business had expanded to include other EU countries – were subsequently included.
Based on the information provided by the company and GFL’s experience, further financing instruments on the supplier and receivables side were put in place. For large customers, targeted Factoring was introduced and factoring was additionally used for financing both domestically and internationally. As well as this, more and more clients were allowed payment terms. Through good financial communication, GFL’s experts also extended supplier lines with the credit insurance companies in order that credit limits were increased.
“At present we are optimally positioned in the area of financing”, said Marco Göbel. “To a great extent, that’s down to GFL. What differentiates GFL is their competent advice from one company to another and the integration between the individual areas. We have been working with GFL’s team now for years, are extremely satisfied with their expertise and look forward to working together towards an exciting future.”