The properly structured Corporate Trade transaction enables the Client to realize substantially greater value for their excess or underperforming assets in a timely fashion through accepting payment in the goods and services that they require in their normal course of business.
All goods and services provided via the Corporate Trade transaction are delivered strictly to the Client’s normal commercial terms and specifications.
ReX Clients integrate Corporate Trade into their business plans and budgets as a tool help manage risk and generate increased profitability.
The Benefits of Corporate Trade Transactions Include:
- Significantly higher financial returns as compared with any form of cash liquidation of under-performing assets
- Reduction of the cash outlay for recurring, budgeted business expenditures
- Extension of marketing and advertising budgets by funding the additional expenditures with surplus assets
Goods and Services utilised in Corporate Trade Transactions Include:
- Media and advertising
- Shipping
- Packaging
- Printing
- Other logistics
The Trade Credit
The Trade Credit is the form of payment used in Corporate Trade transactions.
The Client company who receives the Trade Credit utilizes it to partially pay for budgeted cash business expenses such as its annual media spend.
ReX completes a detailed analysis before the completion of every Corporate Trade transaction to ensure that the Client’s planned level and type of expenditure is sufficient to enable full utilization of all Trade Credit issued.
ReX then works with the company’s existing and new suppliers to ensure maximum utilization of the Trade Credit.
Example Corporate Trade Transaction
Problem
A producer of consumer electronics equipment has an excess inventory of laser printers with a book value of $3,000,000 and an agreed current market value of $1,000,000 if sold through traditional cash distribution channels.
Solution
ReX, working with the CFO and relevant executives of the Client company, structures a transaction which entails:
- Analysis and assessment of the excess inventory value *
- Underwriting process to ensure a sufficient level of budgeted expenditure in the Client’s target procurement areas
- Agreement of remarketing parameters to ensure no conflict with existing Client distribution channels
- Purchase of the inventory for $3,000,000 with payment in Trade Credit
- ReX takes immediate title of the goods and if necessary, delivery into its warehouse.
- ReX remarkets the inventory according the agreed Client parameters
- Client utilizes the $3,000,000 of Trade Credit over the following 12 months as follows:
- Client’s budgeted media and advertising budget of $15,000,000
- Client funds the media and advertising budget with $3,000,000 of Trade Credit and $12,000,000 of cash
- All media is delivered strictly to the Client’s (and their Ad Agency’s) specifications
- Client realises a greater than 300% gain on the sale of their excess inventory in one fiscal year, as compared with a cash disposal
* The ReX remarketing experts review the pre-approved secondary channels to determine a valuation taking into consideration how long is required to place the inventory quietly through approved channels and the price points needed to avoid market disruption for the Client.