Chemical and petrochemical industry
Expocredit decided to approve a line of $1.5 million, an amount that allows the company to optimize its operability
Deal Summary
Product
Factoring
Funding Line Amount
$1.5 million USD
Company Type
Production of chemicals and petrochemicals
Industry Type
Chemical
Location
Peru
This Peruvian company is a pioneer in the production of chemicals and petrochemicals. It has had a presence in the Andean country since 2018 but is part of a Uruguayan corporation founded in 2003. It specializes in the supply of thermoplastic resins, chemical inputs and highest quality minerals for multiple industries.
In the last two decades, this business group has expanded its commercial activity in other countries, such as: Belgium, Colombia, Ecuador, Mexico, Peru, Luxembourg and the Netherlands, exporting products to more than 40 countries with continuous growth of its supplier and customer portfolios.
In the last two decades, this business group has expanded its commercial activity in other countries, such as: Belgium, Colombia, Ecuador, Mexico, Peru, Luxembourg and the Netherlands, exporting products to more than 40 countries with continuous growth of its supplier and customer portfolios.
Challenge
The Peruvian subsidiary has decided to increase its operating capacity due to high growth; the company has generated higher profits in the beginning of 2021 than throughout all of 2020. The consequences of the COVID-19 pandemic, followed by high demand and a considerable increase in its sale prices led to a breakthrough in the Latin American market.
The main obstacle that the company faces is its payment structure. Customers generate orders that take between 3 and 5 days to create, and the order is sent generating a bill of exchange when it leaves the warehouse. Although the maximum terms are 90 days, each invoice can be paid through several bills of exchange, each with different payment dates.
This payment method is common in the industry and generates confidence with insurers. Each bill of exchange has strict terms and maturities that have legal and economic consequences for debtors in the event of default. In most industries, the past due bills are from the beginning of the pandemic, a period in which companies were forced to suspend their activity.
The main obstacle that the company faces is its payment structure. Customers generate orders that take between 3 and 5 days to create, and the order is sent generating a bill of exchange when it leaves the warehouse. Although the maximum terms are 90 days, each invoice can be paid through several bills of exchange, each with different payment dates.
This payment method is common in the industry and generates confidence with insurers. Each bill of exchange has strict terms and maturities that have legal and economic consequences for debtors in the event of default. In most industries, the past due bills are from the beginning of the pandemic, a period in which companies were forced to suspend their activity.
Solution
Considering that accounts receivable are liquid assets only to the extent that they can be collected in a reasonable time, the company faces a precarious situation by presenting long collection periods and accounts payable higher than the income obtained. In this case, Expocredit decided to approve a line of $1,500,000, an amount that allows the company to optimize its operability.
The liabilities of the subsidiary are not owed to third parties, but to the parent company itself. Therefore, with the line provided by Expocredit, the payment cycle can be optimized and begin to have greater financial independence, which will consequently increase the cash flow of the business group in general.
Expocredit’s services are provided through a contract that complies with Peruvian domestic guidelines, facilitating the operation. Additionally, the group opened an account on behalf of Expocredit to make direct payment for the service, avoiding additional charges for rate of exchange.
In this context, Expocredit understands how essential it is to assist companies with relevance in the chemical and petrochemical production sector, as they are a fundamental part in the creation of innovative solutions to improve the lives of people in sectors such as housing, food and mobility around the world, and a fundamental commercial pillar for the development of the Latin American economy.
Expocredit’s services are provided through a contract that complies with Peruvian domestic guidelines, facilitating the operation. Additionally, the group opened an account on behalf of Expocredit to make direct payment for the service, avoiding additional charges for rate of exchange.
In this context, Expocredit understands how essential it is to assist companies with relevance in the chemical and petrochemical production sector, as they are a fundamental part in the creation of innovative solutions to improve the lives of people in sectors such as housing, food and mobility around the world, and a fundamental commercial pillar for the development of the Latin American economy.
The liabilities of the subsidiary are not owed to third parties, but to the parent company itself. Therefore, with the line provided by Expocredit, the payment cycle can be optimized and begin to have greater financial independence, which will consequently increase the cash flow of the business group in general.
Expocredit’s services are provided through a contract that complies with Peruvian domestic guidelines, facilitating the operation. Additionally, the group opened an account on behalf of Expocredit to make direct payment for the service, avoiding additional charges for rate of exchange.
In this context, Expocredit understands how essential it is to assist companies with relevance in the chemical and petrochemical production sector, as they are a fundamental part in the creation of innovative solutions to improve the lives of people in sectors such as housing, food and mobility around the world, and a fundamental commercial pillar for the development of the Latin American economy.
Expocredit’s services are provided through a contract that complies with Peruvian domestic guidelines, facilitating the operation. Additionally, the group opened an account on behalf of Expocredit to make direct payment for the service, avoiding additional charges for rate of exchange.
In this context, Expocredit understands how essential it is to assist companies with relevance in the chemical and petrochemical production sector, as they are a fundamental part in the creation of innovative solutions to improve the lives of people in sectors such as housing, food and mobility around the world, and a fundamental commercial pillar for the development of the Latin American economy.
