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‘Long lead times require planning and investment’

Keith Richardson, Managing director in retail sector at Lloyds Bank Commercial Banking

The must-have fashions of the season are months, maybe years, in the making.

These long lead times require planning and investment, and open dialogue with finance providers is one way to increase competitiveness.

There’s a lot for fashion retailers to consider, not least their margins. Few can afford to secure a product from Europe or Asia only for currency fluctuations to leave them paying more. Long-dated foreign exchange and flexible currency products can help in this instance.

Financing and guaranteeing delivery of stock is also a key issue. Larger retailers use their own good credit profiles to offer suppliers accelerated payment terms. Advancing the total value of invoices in this way improves suppliers’ cash flow so they can invest to meet demand and, ultimately, pass on better price points to the retailer.

If a retailer buys large portions of stock, they may also be able to use an asset-based lending facility to boost their cash flow, freeing tied-up working capital to commit to other areas of the business.

When pressure on the supply chain is par for the course, ensuring new lines are a success means meticulous planning. If banks provide strategy and reduce risk, retailers can significantly boost their buying power.

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