Case studies
VK Shah: A working capital solution that actually works
Sumit Pasricha
The Challenge
No capital, no growth.
It’s a story well understood by now. The pandemic, spiraling inflation and geopolitical turmoil mean that businesses are facing complex and sometimes catastrophic issues in their global supply chains.
As a global technology distributor, VK Shah is all-too-familiar with these challenges. The forced closure of sales routes to Russia and the relocation of stock to the UAE equals increased transit time to new markets. At the same time, strict payment terms – requiring payment within 45 days to release the goods – restricted VK Shah’s working capital and stunted growth.
Without a flexible funding solution, there would be no growth.
The Solution
Finverity worked closely with VK Shah to review their working capital requirements, recognising the need for extended payment terms and increased financing capacity. With a deep understanding of the financial industry and expertise in supply chain finance, Finverity designed a flexible funding facility using Finverity CapitalAccess.
By leveraging their extensive network of funders and collaborating with strategic partners, Finverity CapitalAccess offered VK Shah a much-needed solution to their supply chain challenges. Benefits included:
Extended Payment Terms: Finverity’s Distributor Finance programme with Redington increased payment terms from 45 days to 90 days. This allowed VK Shah to align their payment schedule with their sales cycles, releasing working capital and mitigating cash flow pressures.
Increased Financing Capacity: Finverity CapitalAccess provided a funding facility that enabled VK Shah to optimise their working capital. This allowed VK Shah to pay their suppliers promptly and unlock additional stock to fulfill more orders and expand their customer base.
Unlocking the next stage in VK Shah’s growth
With the Finverity CapitalAccess funding solution in place, the VK Shah business benefitted in multiple ways, including:
More revenue: Annual turnover increased from $100m to $160m two years later, representing an impressive 60% uplift. This growth, longside increased stock turnover, meant more could be sold at full price before discounting. The upshot is that VK Shah’s profits have surged.
Improved cash flow: The extended payment terms allowed VK Shah to better manage their cash flow and align it with their sales cycles. VK Shah can now use their cash more strategically, invest in growth opportunities, and fulfill orders without straining their working capital.
Market diversification: VK Shah has successfully diversified their sales channels beyond Russia and penetrated new markets in Hong Kong, Vietnam, South Korea, and the US. This reduces any such reliance on a single market and opens doors to more customers.
Competitive Advantage: The extended payment terms and increased financing capacity means VK Shah can offer more favorable terms to their customers. This helps VK Shah consolidate their market position and takes market share from competitors constrained by stricter payment terms.
Financial Resilience: VK Shah has secured a flexible financing solution outside of traditional banking channels. This is important for the fact that it reduces the company’s reliance on bank credit, which has become more restrictive post-pandemic.
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