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TREASURY

End of just-in-time inventory creates financing opportunities

Supply-chain disruption has driven the recent increase in corporate stock holdings. Firms may now look to move this excess inventory off balance sheet.

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Euromoney’s most recent trade finance survey underlined how attitudes to stock-holding have shifted since the impact of the coronavirus pandemic started to bite.

At the time, Vinay Mendonca, global head of product, propositions and structuring at HSBC, told Euromoney that the bank was seeing more inventory being held by clients.

Disruptions and product shortages across manufacturing and retail in particular have prompted many to declare the end of just-in-time inventory practices in favour of more just-in-case stocking. In many sectors, companies are reporting a higher-than-expected increase in inventory levels.

At the end of last year, Deutsche Bank said that container shipping could remain constrained well into 2022 and suggested that companies would have to carry higher levels of inventory as a result.

Increasing stock levels may act as a buffer against future supply-chain disruption, but holding more stock comes at a cost. One solution is inventory monetization, whereby the inventory can be held off balance sheet via a true sale – akin to a securitization structure.

Inventory

One firm offering inventory monetization, Supply@Me Capital, is targeting clients with warehoused inventory and plans to execute its first transaction by the end of July for inventory worth up to $1.5

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