Franchiseefirst Powers Retailers Through Fuel Price Surges with Flexible Credit Support
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Rising fuel costs are putting pressure on retailer cash flow, but Franchiseefirst is stepping in to help. Discover how their free Fuel Bond top-ups are keeping businesses moving when it matters most.
With the conflict in the Middle East driving oil prices upwards, it’s likely to put additional pressure on credit limits of independent Retailers and their Fuel Suppliers.
The credit limit and payment terms in place between Fuel Suppliers and Retailers isn’t always too flexible. Just because the invoice cost rises in line with global oil prices, it doesn’t mean a Retailers credit terms will reflect.
Credit limits are often fixed and generally based on a review of the latest accounts posted to Companies House, with a bank or an Underwriter from a third-party insurer taking a view on the risk.
There will probably be a lot of difficult conversations taking place with Fuel Suppliers asking their Retailers to pay early, reduction in direct debit collection dates, or worse-providing additional security in the form of cash deposits, bank guarantees of property charges!
Franchiseefirst, who provide payment guarantees to Fuel Suppliers on behalf of their Retailers, have offered to ’top-up’ all Fuel Bonds free-of-charge to allow credit limits to flex with the price increase.
Luke Baker who manages the Franchiseefirst operation said “I‘ve been at the sharp end of price spikes previously and know how difficult it can be to maintain fuel supply in a market where the next order can cost thousands more than the previous delivery. This consequently sends the outstanding balance over the credit limit and the account is placed on-stop”.
“This creates a scramble where Retailers are asked to pay a previous invoice early or provide a cash deposit as security. This can be a double-whammy as Dealers work on reduced margins as the price surges, so cash-flow can tighten dramatically”.
“We believe in the partnerships we have with Fuel Suppliers and Retailers who use our Fuel Bonds and are happy to offer our support when it feels like it’s really needed. The true value of Fuel Bonds to independent Retailers is that they release liquidity and free up collateral, so it’s natural for us to want to support when we see cash-flow pinch-points”.
“Franchiseefirst believe the decision on credit limits and payment terms should be made between the Fuel Supplier and Retailer, not a third-party who doesn’t know the business. So far, we have provided top-ups to independent retailers across Europe and the UK, of over €1.5m of additional credit completely free of charge to protect cash flows and stand ready to do more if we are asked”.
