A Caterham-based business that specialises in researching, sourcing and distributing chemicals, has received funding from Lloyds TSB Commercial Finance to enable it to seize new international business opportunities.
For more than 40 years, Prom Chem has provided global companies with specialised chemicals, importing and producing them using a network of international operations. Its core product, PROMEX BIT, is now the active ingredient of choice for use in the coatings industry.
Prom Chem sources the raw materials for its products in the Far East and outsources part of the manufacturing process to the US. Since most of its suppliers operate on a pre-payment basis, this has created a need for additional up-front working capital, which will increase as the business wins more contracts.
To fund this complex requirement, Prom Chem approached Lloyds TSB Commercial Finance, which provided a factoring facility to advance the value tied up in its balance sheet and bridge the gap between the company sourcing raw material from suppliers and receiving payment from its international customers.
This is assisting with the firms’ growth strategy by enabling Prom Chem to target additional business in the growing markets of Eastern Europe, Latin America and South East Asia.
As part of the restructuring, Prom Chem also opened up a bank facility with Lloyds TSB Commercial, in order to secure the support of a financial partner which has significant experience in international banking.
Claus Prom, managing director at Prom Chem, said: “The life cycle of our transactions and the lengthy process involved in shipping our products abroad means that it can take up to four months for us to receive payment.
“The funding from Lloyds TSB Commercial Finance has boosted our cash flow to enable us to service an increased overseas demand, which is, in turn, helping to grow our business here in the UK.
“Our international payment terms are complex but Lloyds TSB Commercial manages all of our different accounts and various currencies that we have to deal with, so the process is seamless for us.”
Paul Rice, regional director for Lloyds TSB Commercial Finance, commented: “Prom Chem runs a complex operation, conducting research into chemical processes as well as partnering with overseas manufacturers to create its specialist products.
“This dual business role adds pressure to Prom Chem’s liquidity, particularly considering the time taken to ship goods abroad. Our funding ensures that the company has access to working capital during the time between raising an invoice to its international customers and receiving payment.
“Particularly during these tougher economic conditions, we are seeing more firms use
ABL to strengthen their cash flow and quickly release the value tied up in outstanding invoices on their sales ledger.”
Brian Philips, business development manager at Lloyds TSB Commercial, added: “It’s great to work with a company that is still prospering despite the wider economic downturn and particularly one with ambitions to develop its overseas supplier and client base.
“We worked closely with the management at Prom Chem and our colleagues from across the Lloyds Banking Group to arrange a funding solution that best suits the company’s international needs and will facilitate its continued expansion.”
April 2009