Treasury Practice

Problem Solved: James Taylor, Good Hair Day (ghd)

Published: Jul 2013

Cash-rich but affected by major seasonal swings in cash flow, premium hair-care brand, Good Hair Day (ghd), found the answer in Barclays’ supplier finance solution. Maximising assets has never looked so good!

James Taylor

Director of Finance

Good Hair Day, popularly known as ghd, is a UK-based premium hair care brand. Launched in 2001, the company has built up a range of styling products which are sold across 14 countries globally, mainly through salons.


Sales of Good Hair Day (ghd) products are seasonal, peaking in Q4 as the group capitalises on the Christmas gifting market. Although generally a cash-rich company, this seasonality has some clear working capital implications. The lead time on manufacturing, for example, means that Q4 production is ordered in May. Manufacturing takes place in China over the summer and the goods are shipped to the UK for distribution to salons in October. While the salons are on normal credit terms, with payment due at the end of the year, the European and US-owned manufacturers require settlement ex-works. This creates a funding gap, requiring ghd to hold more cash on its balance sheet than it might normally do. To maximise shareholder value, ghd wanted to release that cash to the business.


“Our Barclays relationship director introduced us to the bank’s supplier finance product,” says James Taylor, Director of Finance at ghd. As lead bank in the firm’s lending syndicate, Barclays was very familiar with ghd’s business and had taken the time to understand its working capital cycle, he recalls. “As a cash-generative business our assets were never truly maximised and Barclays was keen to help us achieve that.”

Despite some initial reservations, ghd quickly saw the benefits of supplier finance. “One of the key advantages is that it is off-balance sheet and outside the current loan documents so it is not caught under any debt finance rules,” Taylor explains. This means that it does not impact lines of credit. Clearly this requires ghd to have a robust balance sheet and credit terms with Barclays, and it also required the other banks in ghd’s syndicate to assess the viability of the solution.

The intention was for ghd to use this solution with a limited number of trusted partners, initially approaching just two major suppliers. For an overseas business with limited access to low-cost debt, this solution can be “extremely advantageous”, notes Taylor.

Because ghd settles invoices with the bank, the interest rate available to suppliers is based on ghd’s credit rating with Barclays. This means that, although an overseas supplier with tight margins will have more risk around its credit terms, they can draw down the cash in the system with “extremely competitive” UK interest rates.

The other clear benefit to suppliers is control of the draw down process and therefore the cost to their business. Invoices are approved immediately by ghd and on the system suppliers can draw down funds right up to the due date. As a result, the supplier using the facility found it a useful means of managing its own cash flow, Taylor reports.

In operation, supplier finance has proven to be “very user-friendly”. It has also created an immediate uplift of ghd’s cash balance, adding 60 days to its working capital cycle and enabling the firm to be a lot more efficient with its cash. For Taylor, optimisation of assets is the main corporate advantage but there are also practical instances where supplier finance has proven its worth. It is, he notes, “a useful tool in any negotiation with the supplier; if they don’t want to move on price we may be able to move on credit terms.”

With the solution working “extremely well” from the outset for all parties, Taylor is now looking to extend it to more suppliers. And whilst he will be “cherry-picking” the ones he feels are most likely to benefit, he is clear that ghd will be working collaboratively with its suppliers and Barclays to build on the success of its current supplier finance proposition.

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