Distressed stock is money sitting around in another form and consuming cash flow while it’s sitting, waiting to be written down. Inventory Media Trading (IMT) allows you to convert it into advertising and avoid a write down. IMT helps protect the balance sheet and cash flow of the business.
IMT allows any business that advertises a way to increase their advertising budget and market reach without the need for additional cash flow. IMT works for any business from SME’s up to multinationals and offers them the opportunity to part purchase media with their distressed products or services rather than their cash.
Media 4 Retail (M4R) leads the way in new generation Inventory Media Trading, helping businesses to optimise their marketing budgets, conserve cash flow and create new distribution opportunities for their products and services. Working in collaboration with a client’s in house marketing department or agency to provide an additional return on their marketing spend over and above what they currently achieve.
In today’s business environment, M4R offers inventory media trading as a finance option and as a way to capitalise on stock on hand and distressed stock.
M4R will guaranteed 30% to 50% return on any media spend you place through us; on a £100k spend that would deliver a guaranteed return of £30k to £50k in incremental sales.
Distressed Stock Transaction
Accounting for Distressed Stock
Over time, your company’s inventory/stock can perish or become obsolete. If you do not reduce its value on your books, your annual financial statements may be misleading to investors and lenders. To correct this problem, generally accepted accounting principles, or GAAP, allow certain adjustments for distressed inventory. If the inventory is not completely worthless, the company may be able to recover some of its investment by selling it as salvage or donating it to charity for a tax deduction.
When Does Inventory Become Distressed?
When your inventory should be considered distressed depends on the type of business your company conducts. If you sell food, cosmetics, chemicals or other perishable items, the inventory becomes distressed as soon as it passes its expiration date. Sellers of hard goods, such as auto parts or computer accessories, must periodically evaluate their inventory to see if it has become obsolete or is selling below market value.
Value of Distressed Stock
According to GAAP, you must record your inventory at the lower of cost or market value. For distressed inventory, the current market value will always be lower than its initial cost. You must estimate market value based on your company’s ability to actually sell the product. For obsolete technology, the only remaining value may be the parts used to make the product. If the inventory is subject to physical degradation, you must also evaluate its condition when estimating the current market value.
M4R allows businesses to purchase advertising with a combination of money from the bank and distressed inventory at pre write down values. The impact is to move the inventory and avoid a write down on the balance sheet.
By adding Inventory Media Trading as a funding option, our clients achieve a couple of significant financial benefits. Firstly it allows them to build in more media placements within their current ad budget and secondly in the right circumstances the business may access media with up to a 100% of the payment being made with their first line product or service.
If the media budget has decreased then supplementing a budget with Inventory Media Trading can allow the business to maintain or increase the current advertising frequency level without increasing the demand on cash for payment.
There are two main deliverable pieces to an IMT deal.
- Return on Investment: M4R is able to structure media deals where up to 100% of the media purchase is paid in products or services down to the more traditional deal with 80% in money and 20% in distressed products or services. IMT creates an immediate return on Investment for businesses.
By using M4R to buy media we agree to buy a certain amount of our client’s product or service usually in gift cards or gift vouchers. So effectively the client has an upfront guaranteed return on their media investment before the advertising has even run. With a successful campaign the results only get better.
- Conserving Cash and Leveraging Inventory to Fund the Media: The more traditional barter companies tend to sell media on an 80% money plus 20% product basis. It’s just a little better than a cash discount. M4R on the other hand can, under the right circumstances accept up to 100% payment in products and services. This creates a massive cost saving for the client.
Can I Achieve the Same Deal as I Achieve with my Existing Media Plans?
M4R operates within your existing media strategy. IMT has no effect on the prices provided by your media agency. Media owners have been doing this for years and understand the process.
M4R will not influence the type of the media recommended by your media agency. M4R’s only objective is to optimise the media plan, save the client money and move additional inventory making everything much more efficient. Your marketing department and the media agency remain in control at all times.
What can be traded?
We can trade almost anything! If you have a product or service and would typically advertise then there is a 99% chance we can make a deal work for you. We will look at anything from accommodation, flights, property, cars, jewellery, clothing, shoes, retail gift vouchers/cards, furniture, carpet, wine and hardware.
Why Media 4 Retail and Inventory Media Trading?
IMT is not for every business. It requires a paradigm shift and some out of the box thinking. Not every key executive or every business will want to engage.
The Finance Director is generally supportive. With less cash outlay for the same advertising, the avoidance of write down of distressed inventory values and increased inventory turnover not to mention better profits all putting a smile on the FD’s face.
The Sales Director is also generally supportive. A bigger advertising budget for same cost with a guaranteed ROI and guaranteed sales are appreciated. This together with the liquidation of distressed inventory without cannibalising existing markets is all seen as a positive result.
The Marketing Director can be resistant and may not like a third party becoming involved in current media relationship that may have been in place for years.
The bottom line is that if you want to make your marketing budgets work harder, want to make additional sales and want to move distressed inventory without a write down then Inventory Media Trading could be right for your business.
Routes to Market
M4R has its own product liquidation platform. This platform is made up of people within our partner network. Individuals are personally invited by our partners to participate in the network. The reason M4R can drive the sale of your stock is because we can offer our network a market discount which has no impact on our clients.
Media R Retail Limited can add significant value to your media strategy and business planning. The process is a gentle roll out starting with a meeting and brief. This next step aims to bring all key parties on board. In this meeting we will consider the client needs to maximise the value of their existing inventory and protect their balance sheet from the impact of distressed inventory.
Confidential Distressed Inventory Questionnaire
- What exactly is the distressed product available for trading?
- How many units are there?
- How is the stock packed/packaged?
- What is the volume, weight, quantity of each unit and individual items?
- What is the weight of the complete parcel?
- How many Pallets (UK or Euro) does this equate to?
- How is the stock delivered – Will you cover delivery costs?
- Will you provide reasonable paperwork for export at your cost?
- What are the pack sizes i.e. is it boxed on pallets?
- Is it stored in the UK or somewhere else?
- Can they be delivered to a single specific location?
- When can it be delivered?
- What is the current market price to the general public?
- If relevant, what exactly is the warranties/expiration/use by dates on the products?
- What are the restrictions of sale; distribution channels, retail outlets, territories, etc?