Oil additive manufacturer mixes funding formula for global growth

In addition to funding the UK business, BFS provided £700k of invoice finance funding to SBZ’s US-based sister company.

SBZ was established in 2003 and is a family-run business owned by Laurence Holder. The business is a supplier and distributor of fuel additives, lubricant additives, base oils, marker dyes and specialist products designed to meet the needs of international oil groups.

Following strong recent growth, SBZ has invested heavily in its business during 2017 and will be opening a new purpose-built blending plant at its current facilities in January 2018.

The business sought to increase the level of invoice finance funding that it could receive to manage an expected increase in orders.

BFS increased the facility to £7m after working with the business to understand future growth projections.

Laurence Holder, chief executive, SBZ Corporation, said: “We have seen significant growth in recent years as a result of increasing demand for our products.

“With a new facility opening soon, we needed additional buying power in order to purchase the supplies we require to serve our customers. Bibby Financial Services was able to provide us with the funding we needed in a short space of time.”

A key component that will support accelerated business growth is access to raw materials that SBZ imports into the UK.

In the past, the business has worked with European suppliers on shorter delivery times but often at a premium price.

Increasingly, the business is looking to suppliers in China and the Far East, which are more competitive in pricing, but orders often take between 6-8 weeks for delivery with payment required prior to dispatch.

With the help of its new trade finance facility, SBZ can pay its suppliers upfront, allowing for the longer delivery times, and remain in a positive cash flow position.

Holder added: “As a result of the EU referendum and the fall in the pound, we have seen our costs go up as we import a large proportion of our raw materials. At the same time, we have tried our best to keep our prices the same for our customers.

“We have therefore increasingly looked to other suppliers which are able to keep us competitive by providing raw materials at a lower cost. To remain in a strong cash flow position, we now use our trade finance facility to navigate the different payment terms from international suppliers and are able to pay upfront.”

The final component of the funding package is a foreign exchange facility, which allows the business to buy in China while trading in US dollars.

SBZ can agree forward contracts which lock in the exchange rate at an agreed price, removing the risk of volatility in currency markets.

Paul Fraser, director of specialist at Bibby Financial Services, said: “SBZ was initially only looking for additional buying power, but by discussing the business’s needs and developing a keen understanding of its ambitions, we were able to put together a suite of products to help it realise its growth.”

SBZ Corporation was introduced to BFS through Trade Finance Global, which helps businesses to find the best trade and invoice finance solutions from a range of funders.