Inventory Finance
One of the Australia's most important wine merchants made the recent expansion into mail order a natural hit with clients.
Stock requirements rapidly increased to meet new sales. Having used their available real estate equity to start the business some years ago, alack of working capital sources placed this expansion in jeopardy.
Through a $700,000 inventory finance facility, orders are now made in bulk combining up to 14 shipments. Supplier discounts and freight savings received are well in excess of the inventory finance costs.
Without the need for additional real estate equity, this leading retailer is now able to increase their net profit potential by $1.57 million this year.
Tailor made solution
A shoe designer, experiencing rapid growth was forced to pay upfront for raw materials, manufacturing, and delivery, which caused significant cash flow shortages. Waiting up to 60 days for payment from retailers combined with season peaks meant that growth was restricted, and at times there was insufficient stock to meet demand.
Using a $1 million Inventory Finance facility, they now have easy access to cash flow for stock purchases year round, without any pre-sale requirements. They can pay for stock up front and align the loan repayments with receipts from retailers.
Inventory finance is assisting this fashion company in the achievement of a $4 million increase in turnover this year which will result in a significant rise in net profits.
Invoice Discounting
A recruiting company has achieved phenomenal growth using a three-pronged strategy of organic growth, acquisition and invoice discounting as the key funding tool.
A significant part of the recruiting company's strategic success was due to Invoice Discounting with one of the biggest Australian Banks.
Invoice Discounting makes all the difference in an industry where payments take anywhere from 14-60 days to receive. Waiting up to 60 days for payment means a loss of cash flow and an inability to take advantage of growth opportunities.
For manufacturers, importers, and wholesalers with a spread of outstanding debtors, Invoice Discounting can be an important strategy to assist growth.
In this case, the receivables gap could potentially be a staggering liability. For the first three years, the owner's recruiting company funded the business out of retained reserves, juggling seasonal spikes such as quarterly superannuation and GST payments. It was when the company needed finance to acquire two complimentary businesses worth $700,000 that they approached the bank for an invoice discounting facility.
The business we are in has limited hard-core assets and therefore Invoice Discounting the most suitable form of finance. The best asset is the debtor, and assigning invoices to the bank has been one of the best decisions the company has made. The Invoice Discounting has proved perfect for funding our strong expansion and providing peace of mind during seasonal spikes.
Now the recruiting company is in an enviable position, with the ability to concentrate on the business of recruitment without being distracted by the day-to-day demands of cash flow. Without cash flow issues, the company is better positioned to strategise about organic growth and potential acquisitions.