It is testimony to the expertise within the global wine industry that throughout the Covid-19 pandemic it has not had an impact on the movement of wine around the world. But what it has done has put enormous pressure on cash flow as both producers and buyers have had to move fast to find new channels where they can sell wine. VINEX, the online trading platform for bulk and bottled wine, has launched a new fast track payment service – VINPay – that it hopes can go a long way to addressing those issues. In a nutshell it has set up a fund through which it can guarantee to pay wine producers up to 80% of a buyer’s invoice within three days of them shipping the wine, and then give buyers terms to repay the money up to 150 days. Hopefully freeing up cash liquidity up and down the global wine supply chain.
VINEX offers new fast track secure payment service – VINPay – to help global cash flow for wine producers, suppliers, importers and buyers.
The global wine supply chain is one of the most sophisticated and efficient in the world. Every day there are millions of litres of wine being bought and sold and then shipped from all corners of the planet. Even through the darkest days of lockdown producers and buyers were still able to do business, get their wines to the ports and into the hands of the always reliable international logistics companies (with the exception, clearly, of South Africa).
But what that global supply chain is not as efficient at doing is paying everyone up and down that chain as quickly as they may need. Producers, for example, traditionally will have to wait months for invoices to be settled, constantly juggling where they are sending wine to ensure they have enough cash in their system to make the whole process work.
With Covid-19 placing increasing pressure on both producer and buyer resources it is understandable that some trades are taking longer to be put together, or are not happening at all.
This is where VINEX, which specialises in handling so many of those producer and buyer trades, for both bottled and bulk wine, through its online trading platform, has stepped in with a new payment solution that it hopes can free up the sector and help get more wine moving again, securely and professionally.
It has set up a new payment service, VINPay, which will act as financial partner to both sides of any specific wine trade. By establishing a multi-million pound fund it can guarantee producers that it will pay 80% of any buyers invoice within three days of them shipping the wine. The buyers can then work with VINPay to agree payment terms which can be extended up to 150 days.
Here we talk to Denys Hornabrook, founder of VINEX, about how its new VINPay service is going to work.
Why have you introduced VINPay?
With these uncertain and challenging economic times, exporters understandably are not wanting to carry the risk of their buyer not paying, and so this is an opportunity to provide that assurance, and at the same time provide buyers an opportunity to preserve their cash flow beyond just 60 or 90 days. VINPay provides producers, suppliers and their buyers with increased liquidity at a time when they most need it.
How does it work?
Producers can choose to VINPay their invoices and receive an 80% advanced payment within three days of dispatching their wine, and be guaranteed 100% payment. The balance is paid by VINPay within three days of the invoice due date (being either 60 or 90 days from dispatch).
Who can use VINPay?
The buyer must be VINPay approved, and located in the US, UK or Europe. VINPay is available to VINEX registered producers and suppliers located in any country.
How is VINPay able to cover 80% of the payment within three days?
VINEX has been able to secure funding in excess of £20 million in order to provide this fast track secure payment service to suppliers. There is also no interest paid on the advanced payment, just one scheduled fee.
Is VINPay only available if I trade through VINEX?
No. All suppliers (and buyers) can choose to VINPay invoices for their existing direct transactions, provided the buyer is VINPay approved. However, if they do trade through VINEX and want to VINPay the invoices, there’s no VINEX trading fee.
How much is the VINPay fee?
There is a fee scale, with a discount for a minimum annual commitment. The fee is deducted by VINPay from the 80% advanced to suppliers and starts from 1.6% (for 60 day invoices) and 2.4% (for 90 day invoices) inclusive of credit insurance. Buyers can also choose to extend their invoice payment by 60 days from 1.6%, potentially up to 150 days.
Can you give me a case study to illustrate how a typical trade might work?
Let’s say supplier wants 100% payment assurance, and earlier access to cash. The supplier would receive a purchase order and forwards it to VINPay. VINPay would then check to make sure the buyer is credit approved and that they agree to accept the supplier’s terms of 60 days from EXW.
VINEX would then forward a rolling agreement to both parties and obtain their acceptance. Prior to dispatching the wine, the supplier provides a pre-dispatch sample to the buyer for their acceptance. On receiving acceptance, the supplier dispatches the wine and forwards the invoices to the buyer and copies in VINPay.
On receiving the invoice, VINPay transfers payment to the seller, being 80% of the total value, within three days. VINPay deducts a settlement fee from the funds transfer. Then, within three days of the invoice’s 60 days payment due date, VINPay pays the remaining 20% to the supplier, adjusted for any agreed rebates or product quantity variances.
The buyer pays VINPay the agreed invoice amount on or before the due date, or elects to increase the payment term by another 60 days, paying VINPay a 60 day extension fee in advance.
Does VINPay hold security over my wine or assets?
No. VINPay is secured by its own trade credit insurance arrangements. The funding provided is unsecured, off-balance sheet and not related to your bank finance arrangements. Typically bank finance fees are lower than VINPay, but banks take security over your wine and winery assets and don’t guarantee you 100% payment in the event the buyer doesn’t pay.
How do I find out if my buyer is VINPay approved?
Email VINPay and provide the buyer’s company name. If not registered and approved, VINpay can approach the buyer on your behalf, with your permission.
How do I start?
- Email us to check if your buyer is VINPay approved.
- VINPay will send you an agreement for your review and acceptance, and then forward it to the buyer to accept.
- When the supplier loads and dispatches the wines, they need to copy VINPay on their issued Invoices and provide a Proof of Dispatch document.
- VINPay pays 80% of the invoice(s) within three days. The 20% balance is paid within three days of the invoice due date, regardless of whether or not the buyer has chosen to extend their payment by a further 60 days.
If you would like any more information on VINPay then email: firstname.lastname@example.org.
- This article is part of a partnership package with VINEX.