Consortium for companies: how to expand the business without putting pressure on cash

Renewing vehicles, expanding the fleet or investing in new equipment is part of the growth plans of many companies. The challenge is to balance these investments with the need to keep resources available for day-to-day operations.

In this scenario, consortiums for companies have gained ground as an alternative to finance business expansion in a planned manner. To understand when this modality makes sense, which assets can be acquired and the main precautions before hiring, InfoMoney spoke with Sebastião Cirelli, director of consortiums at Rodobens, and Bruno Borges, CMO of Mycon Consórcios.

The consortium in the company’s financial planning

and this is precisely one of the advantages of the consortium for companies.

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As Borges highlights, the operation allows the company to acquire vehicles without an initial outlay of equity capital and without a down payment. “This dilutes the investment into predictable monthly installments,” reinforces the Mycon CMO.

In turn, Cirelli observes that, when the company is included, it receives a letter of credit to purchase the good under conditions similar to those of a cash payment, which increases its negotiating power with suppliers. And the consortium also adapts to the investment timing.

“The expansion of the fleet can happen in a phased manner and aligned with the company’s growth”, says the director of Rodobens. In practice, you can plan acquisitions gradually, with quotas over time.

When the consortium makes more sense than financing

Everything will depend on planning and business needs.

As Borges explains, because the operation is interest-free – only administration fees. Therefore, the modality is more suitable for planned expansion projects, such as fleet renewal, opening of new units or future acquisition of equipment.

For companies that need to speed up this process, there is still the option, as long as this strategy is part of the financial planning since hiring. As Sebastião Cirelli highlights, the ideal is to align the expected moment to receive the letter of credit with the real need of the business, avoiding the acquisition occurring before or after what is necessary.

What goods does a company usually buy with a consortium?

The focus of companies that seek consortiums is usually business expansion, says Cirelli.

Among the goods, light vehicles for corporate use, utility vehicles, vans, trucks and road implements stand out. Depending on the sector, tractors, harvesters, agricultural equipment, construction machinery and industrial assets may also be included in the list.

Another relevant application of the consortium for companies is the purchase of commercial properties, warehouses and land, which can support expansion projects. In these cases, notes Borges, the financial gain from financing becomes more evident, as the values ​​of the operations are higher.

Most common mistakes when using the consortium to expand the business

Both interviewees state that the main failure is to see the consortium as a short-term solution. As contemplation depends on a draw or bid, the modality works best when it is part of medium and long-term planning.

Another common mistake is contract the letter of credit without considering the evolution of the business. According to Bruno Borges, the value needs to follow the asset that the company intends to acquire until the moment of contemplation. It is also important to assess whether the cash flow supports the payment of installments throughout the contract.

In Cirelli’s assessment, many companies also fail to define a strategy for contemplation. This includes not thinking about the bid or not aligning the consortium contracting with the moment when they will actually need the goods.

When these factors are considered from the beginning, the consortium works as an investment planning instrument, and not just as a credit alternative.