18.02.2016

Flooring makes all the difference in completing a sale

Show a prospective purchaser a new property that is little more than four empty rooms, and the chance of a sale is next to zero. Give the same property a professional makeover with carefully selected furnishings and carpets, and an array of kitchen fittings, and there is a starting point for a deal. Styling can make all the difference between a new-build being sold before the paint has dried, and remaining (expensively) on the developer’s books for months.

A handful of specialist interior design companies work on the all-important show houses for developers to give them a ‘must have’ feel. On occasions, creative styling is taken to extreme lengths, with rooms fitted out with specially made reduced size furniture to create the impression of space. But the style practitioners generally rely on their presentational skills to help their clients sell new properties.

The market for dedicated retirement homes is an important sub-set of the total property scene; inevitably a growing sector which requires a careful focus on the styling to differentiate the successful sales from the also-rans.

Many of the properties in question are ‘community’ developments with shared facilities such as corridors and lounge areas that are viewed as part of the total package on offer. The stylists’ brief therefore extends beyond the boundary of a single show bedroom or adapted kitchen. It follows that floor-covering is likely to leave the longest-lasting impression on viewers when they visit a new-build in the final stages of development.

The specialist flooring suppliers involved are sure of their payment if they deliver on time and to specification. The kind of builder which sees the merits of styling is generally very successful and has a trade credit rating to match.

But the strength of a contract does not mean that the supplier will find it easy to fund the purchase of the carpet, underlay, vinyl floor-covering and the assortment of gripper bars and door plates that will be needed. And that does not take account of the cost of fitting.

There is also the question of timing. Styling contractors are typically given a date for when their services are required: that can be more than a year from the starting point. Any delays in completing the main build have an impact upon those companies which have had to commit to expenditure: their own suppliers will demand at least a part payment.

Some form of bridging finance is therefore required. That was the dilemma faced recently by a UK company which purchases and fits a wide variety of floor coverings in retirement new-builds.

Recommendation from an existing client

While the business had already contracted with an invoice discounting company to finance sales from the point of heir completion to payment by the developer, there are no similar financial facilities for covering the initial outlay. Traditional bank finance is usually not a possibility as the invoice discounter will have secured its own funding by a charge over the supplier’s assets. Once utilised, that security cannot be applied against other conventional loans to that company.

Fortunately, word spreads around a ‘closed’ industry like interior styling. An established client of Trade & Export Finance working in a similar field recommended the flooring supplier to contact TAEFL and make a case for funding its orders. UK EXIM Finance, a specialist lender within TAEFL, agreed to fund the floor-coverings, associated ‘technologies’ and the labour involved.

A rolling facility of £50,000 was agreed, with UK EXIM Finance paying out in tranches of £10,000 to £25,000. The TAEFL organisation automatically reduces its exposure when the flooring specialist’s sales invoices have been accepted by its invoice discounter, which makes payment against them.

The recommendation to apply for funding from the TAEFL group happened to come from another interior stylist. TAEFL’s experience, however, extends across virtually every sector and to clients serving customers in the UK and internationally.

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