Client has identified problem stock with a value of £1m. However, the realisable cash value is only £333k
To avoid taking a £667k loss, the client sells the stock to Astus receiving the full £1m in Trade Credits (TC’s)
Client now has £1m in TC’s to use against any forthcoming expenditures e.g. media. The TC’s are always used with cash. An average blend is 80% cash & 20% T/C’s
By using TC’s in part payment of Goods & Services supplied at the clients normal cash rates and quantity, the client has, once all the TC’s are used, received the full £1m value for the problem stock
The stock can be sold on by Astus or the client and the £333k received from this is taken by Astus
One Trade Credit = £1
e.g. £5m of net media will cost £4m in cash and £1m in Trade Credits