After spotting a man smoking an e-cigarette on holiday in 2010, Andrew Logan combined his engineering background and passion for design to create JAC Vapour. Starting the vaping brand from his flat, it now has an annual turnover of £3.2m and is the only UK e-cigarette company to manufacture its own products.
Based in Edinburgh, JAC Vapour now has 26 employees and recently won a contract to supply all Scottish prisons, after the government announced they will become smoke-free from December this year. As well as Scottish prisons, JAC Vapour supplies to a range of outlets including Vaperized, Socialites and Pipeline in Germany and France, while the business also has customers in the USA.
With revenues forecast to reach £4.2m this year, a tailored and structured funding package was required to meet the business’s growth targets. With contract payment terms can often spanning from 60 to 90 days, the funding line will be used to offset the gap in cashflow. With the facility from BFS, JAC Vapour can release cash from unpaid invoices, bridging the gap between paying suppliers and receiving payment from customers.
As the business imports parts from China, the combination of Foreign Exchange and Trade Finance enables JAC Vapour to buy stock at a more competitive price and speed up the trade cycle.
Shereen Smillie, Finance Director of JAC Vapour, commented: “The global vapour products market is growing substantially, valued at £1.7bn. The UK is one of the top three markets, so there’s huge potential for us to grow our market share in the UK and for the industry itself to continue its rapid expansion.
“We were recommended to the Trade Finance team at BFS due to their expertise in supply chain funding and international trade. There’s a lengthy cashflow gap for us between the manufacture of our goods in China, and debtor payment here in the UK. The Trade Finance, Invoice Finance and FX funding package has given us sufficient working capital to fulfil larger contracts, giving us the capability to expand and ease our cashflow pressures.
“The impact of Brexit means we are increasingly managing currency fluctuations but working with the Foreign Exchange team has enabled us to secure a better rate, which makes a significant difference. We can now forecast our expenditure more accurately, helping us to ensure that we are pricing our products correctly. It also protects our profit margins against currency volatility.”
Stewart Couper, Business Development Manager at Bibby Financial Services, said: “There is a substantial growing market for e-cigarettes, and the focus on quality of JAC Vapour’s products has led to its commercial success. The business has ambitious yet attainable growth targets, so it’s great that the Trade Finance facility will help improve cashflow, enabling JAC Vapour to fund existing contracts whilst taking on new ones.
“The new facility allows the business to unlock cash tied up in invoices, providing the funding it needs to fulfill orders, improve cashflow and grow sales. Our Foreign Exchange team is also dedicated to securing the best rates, which is crucial to JAC Vapour given that they frequently imports goods from overseas.”
“It is an exciting time for the business and we look forward to working with JAC Vapour and assisting them on their road to future growth and success.”