Benteler International Trading

Inventory trading

Traditional asset backed finance covers accounts receivable and fixed asset positions, through factoring and leasing respectively. BTI’s inventory purchasing models can be integrated alongside these solutions as they do not require goods to be invoiced to a customer.

Assets Off balance sheet models Model strength
Inventory

BTI model

Asset de-/recognition compliant to IFRS and US GAAP according to Big 4 accounting firms
Long term committed funding that is not reliant on a customer mix or the CP market
All costs are computed in the material price

Receivables

Factoring / Supply chain finance

Only short term funding available due to uncertain customer mix and insurance availability
Pressure by regulator to disclose these arrangements after recent high profile bankruptcies
Hidden recourse on seller through eligibility criteria of receivables

Fixed assets

Operating leases

Will move on balance due to IFRS t6 changes
Adjustred for by all ratings agencies and analysts

Inventory

BTI model

Receivables

Factoring / Supply chain finance

Fixed assets

Operating leases

Our Solutions
Our solutions cover the full life-cycle of inventories, from raw material and work in progress to finished goods.
It is also possible to create tolling structures, where BTI retains ownership of the material from the purchase of the raw material to the direct sale to the final customer.
Advantages
  • Improved metrics under IFRS and GAAP, such as improved leverage, earlier revenue recognition and increased ROCE.
  • Purchasing on a committed basis, with tenors up to 5 years available
  • Higher safety stocks without increasing working capital
  • Reduced purchasing price through bulk buying and consignment and strategic timing of purchases
  • Reduced logistics cost through bundling of shipments
  • Usage of existing trade finance programs on onward sale
Advantages
  • Improved metrics, such as improved leverage and ROCE.
    As we offer to liquidate assets on a committed long-term basis, companies can choose to either invest the resulting cash position into more value adding investments or to repay long term debt. Further, the ability to sell goods to us at any stage, gives customers the option to bring forward revenues.
  • Purchasing on a committed basis, with tenors up to 5 years available. BTI’s funding is made available on a committed basis with long-term agreements. In traditional working capital finance solutions, a borrower proposes new assets to be financed or receivables to be purchased to a lender. Depending on the quality of the assets, such as the type of inventories or counterparty to the receivable, varying amounts of funding are offered. BTI finances all purchases of products on a revolving basis up to a pre-determined amount, at an agreed price for the entire duration of the agreement.
  • Higher safety stocks without increasing working capital. An important feature of the BTI solution is the ability to increase both raw material and finished goods stocks for our customers. This is especially important in modern supply chains as increased lean requirements increase the risk of production stops. On the finished goods side, working capital restriction are at odds with availability, leading to a reduction in sales. BTI counteracts that by buying even slow turning products to enable customers to offer a larger range of products.
  • Reduced purchasing price through bulk buying and consignment and strategic timing of purchases. Our solution allows companies to buy raw materials in larger quantities than what would be possible given working capital restrictions. This can be especially beneficial during periods where commodity prices are low, for example when purchasing raw materials for a large project, or when suppliers offer a volume discount based on a minimum annual offtake that has not been achieved.
  • Reduced logistics cost and risk through bundling of shipments. Modern manufacturing techniques such as one- piece flow and the general trend to reduce batch sizes leads to higher time pressure on supply chain management to ensure on-time delivery. Despite being beneficial for capital efficiency, this causes sub-optimal transport mode utilization. BTI allows companies to build buffer stocks at every node in the supply chain to achieve both faster delivery times and lower cost through reducing the number of shipments. BTI takes all risks of ownership of the goods, allowing for novel risk management approaches.
  • Usage of existing trade finance programs on onward sale. Since BTI is buying unsold inventories, customers are free to integrate us into their current trade finance programs and utilize their rates.
Illustrative financial impacts of inbound and offtake management
Trade Infrastructure Solution
The backbone of our infrastructure is an SAP S/4 Hana solution that we apply in every supply chain we operate. Once integrated, it serves as a single point of contact for all aspects of the supply chain and can be customized to exchange data directly with a customer’s ERP system.
Trade Infrastructure Solution Trade Infrastructure Solution
Flow digitalization

Conversion of EDI orders into paper orders or L/C’s
Digitalization of all logistics nodes and suppliers
Live product location tracking through GPS data
Data interface into BTI system for live inventory levels
Supply chain analytics

Lower operational burden for customers through single contract party
Process transparency by providing electronic transport notifications
Information aggregation in customized cockpits
Forecast and order verification to avoid human order errors