Introduction to Multi-Option Facilities 

Running an import or export business can strain your cash flow, but a Multi-Option Facility (MOF) can be your financial ally. This solution consolidates various credit facilities into one account, providing the flexibility needed to manage credit limits effectively. 

Understanding Multi-Option Facilities 

A Multi-Option Facility (MOF) is a streamlined solution for business owners, bringing all commercial loan and finance facilities under a single umbrella with an overall limit. The key advantage lies in the ability to easily allocate and adjust this limit across different loan facilities, akin to controlling a tap. 

Facilities Compatible with MOF 

• Overdraft 
• Bank bill loans 
• Trade finance 
• Business line of credit 
• Agribusiness line of credit 
• Invoice discounting 

Qualifying for a Multi-Option Facility 

Typically offered to businesses with total loan facilities exceeding $5 million, MOFs are secured against a combination of assets such as debtors, stock, plant equipment, or residential and commercial properties. While there’s no set term, a transaction fee applies for adjusting the overall limit or closing the facility. 

Benefits of a Multi-Option Facility 

The primary advantage is streamlining interactions with the bank when adjusting loan limits. Although not inherently cheaper than separate facilities, a MOF provides cost savings by offering a flexible, consolidated limit. This structure is particularly beneficial for industries with prolonged payment cycles, like import and export businesses. 

Real-Life Example: How Sarah Used a Multi-Option Facility 

Let me introduce you to Sarah, who’s in the business of importing heavy farming equipment. It takes about five weeks to get the parts from abroad, and once they arrive, her team spends around ten days assembling everything. The tricky part? Sarah’s clients take up to 30 days to pay her. So, from start to getting paid, it’s more than three months for Sarah. 

To handle this waiting game, Sarah cleverly relies on trade finance for imports and an overdraft facility to cover related costs. The debt goes into the overdraft until customers pay up, and then Sarah clears the debt. 

But, as often happens in business, things don’t always go smoothly. Sarah needs more time for payment from a major client. Now, instead of dealing with the bank to increase her overdraft limit, Sarah taps into the power of a Multi-Option Facility. She easily shifts the limit from her trade facility to her overdraft, steering clear of the headache of constant bank discussions. 

In simpler terms, Sarah’s experience shows us how a Multi-Option Facility can be a financial superhero for businesses dealing with the twists and turns of payments, especially in industries where getting paid can take a while, just like Sarah’s import-export venture.