Where To Get Money. Not Trumped-up Stories.
FINANCE weekly magazine No.18, May 12, 2008.
Financing. To find resources for business extension and current assets renewal is not an easy task. But still there is a solution…
The story was told by Alexander Petrov, General Director of Trade House “Soyuz-Center” (Moscow).
Type of activity: wholesale of finishing materials and furniture components.
By Alexander Petrov’s words Soyuz-Center uses about 60 million rubles of credit facilities for current assets renewal during a year. The money comes to creation of stock of products for strategic business trends. The point is that business of the Trade House is seasonal. The periods of accumulation of goods occur due to which the company reaches maximum results at the when the demand increases. As a result, at the high season it does not suffer any lack of goods or supply faults. “Part of the money comes to cover the receivables of our clients, - says Alexander Petrov. – We defer payment and we need borrowed funds to provide these deferments.”
Besides loans Soyuz-Center uses factoring. Company management supposes this instrument to be extremely efficient for financing of long-term deferments (up to 60 days).
Several last years the company practices leasing actively obtaining loading machinery and warehouse equipment. Financial lease agreements in the amount of over 3 million rubles are concluded every year. “It’s profitable, - asserts Alexander Petrov. If I don’t withdraw money from circulation the volume of lease payments doesn’t exceed the quarter of the profit that I earn here.”
After its foundation in 2003 the company was among the clients of Federal Industrial Bank but did not meet mutual understanding there and went over to SDM-BANK rather quickly – the bank took a more loyal approach in granting of the first credit facility amounting to 10 million rubles. The partners separated for a short period of time but Soyuz-Center came back to SDM-BANK soon and does not think to change the lender anymore. “Time spent on making decision is very important for our business, - says Alexander Petrov, - in Sberbank, for example, resources may be cheaper but they cannot work quickly enough there because the system is very bulky.”