Trade Finance Archives

What is supply chain finance?

Posted on November 28, 2024December 18, 2024 by Russell Walsh

In today’s fast-paced business environment, mastering cash flow is no longer simply a goal; it’s a necessity for success. Enter supply chain finance – a strategic solution designed to enhance liquidity and strengthen supplier relationships.

Are you a business manager keen to improve operational efficiency and financial stability or a commercial broker looking for innovative funding options for your clients? In this article, we will explore the fundamentals of supply chain finance, its benefits and how it can transform a business’s financial landscape.

Supply chain finance: how does it work?

Supply chain finance, also known as supplier finance, is a financial solution that supports both buyers and suppliers by optimising cash flow within the supply chain.

The solution allows suppliers to receive early payment on their invoices from a third-party financial institution while enabling buyers to hold on to their cash longer via extended payment terms.

Leveraging technology to link buyers, suppliers and financial institutions, supply chain finance enables faster, more transparent transactions. By using supply chain finance, businesses can improve supply chain management and minimise financial risk.

The benefits of supply chain financing

When cash flow is smoother, business operations can thrive – that’s where supply chain finance comes into play. This financial strategy not only eases financial pressure but can also build stronger, more resilient relationships, empowering both buyers and suppliers to better manage financial risks. Matthew Board, Founder and Managing Director of broker.com.au, outlines some of the benefits.

Improve cash flow: Supply chain finance allows businesses to unlock liquidity sooner, giving them the flexibility to extend payment terms without affecting supplier payments or disrupting cash flow. “It benefits both suppliers and buyers,” adds Matthew. “Buyers can maintain longer payment terms, which aids their cash flow, while suppliers receive cash upfront.”
Stronger supplier relationships: “It can also strengthen buyer-supplier relationships,” he says. “With prompt payments, suppliers avoid the frustration of delayed funds, fostering a healthier business relationship.”
Risk mitigation: By balancing cash flow needs for both suppliers and buyers, supply chain finance offers a layer of financial stability, helping to reduce risk and keep operations running smoothly. For suppliers, one advantage is earlier access to funds rather than waiting up to the agreed payment terms. It also reduces the risk of late payments since the lender covers most, if not all, of the payment upfront.”

Do you need supply chain financing for your business?

So, when is supply chain finance a good option? Take, for example, these scenarios:

Businesses with long cash conversion cycles: Companies with extended payment terms often benefit from the way supply chain finance works by keeping operations steady despite delayed incoming payments.
Working with international suppliers: The strategy can be useful for businesses with international buyers, where longer payment cycles are common. It can also improve trade relationships and reduce risks associated with importing and exporting goods.

Matthew recalls one local manufacturing business he worked with that produced carbon fibre wheels for high-end car brands, including Ferrari and Porsche.

“As an original equipment manufacturer for major car companies, you can imagine that the payment terms are at least 120 days. In addition, the bulk of this particular business’s clients were based overseas. Because they were foreign-based buyers, trying to find a financial solution was quite difficult.”

This is where supply chain finance can bridge the cash flow gap effectively.

Supply chain finance is also beneficial for service-orientated businesses with big blue-chip buyers or clients that delay payment, Matthew adds.

He reflects on one case where a labour-hire company had several major banks as clients and faced payment delays. “In situations where staff must be paid fortnightly or weekly, but payment takes months to come through, supply chain finance provides the essential support needed.”

How Octet can help your business thrive

Navigating cash flow challenges and maintaining strong supplier relationships is crucial to business success. Octet’s intelligent supply chain finance solution is designed to support exactly that, giving you the ability to fund business growth and invest in supply chain innovation. Our offering allows businesses to extend payment terms while ensuring their suppliers are paid instantly.

Octet’s supply chain finance and other working capital solutions are tailored to address specific cash flow challenges and growth opportunities. We offer a full range of other products to ensure your business’ diverse needs are met, including:

Trade Finance: Provides a flexible line of credit to power international and domestic trade transactions keeping cash flow steady, allowing businesses to secure inventory and services without straining cash reserves.
Debtor Finance: Turns unpaid invoices into immediate cash, ensuring steady cash flow for companies with extended credit terms.
Term Loan: Provides flexible funding for expansions or major asset purchases with predictable repayments for financial stability.

Discover Octet’s solutions today

With Octet’s supply chain finance, Australian businesses can accelerate cash flow by extending payment terms with customers while ensuring suppliers are paid promptly, creating healthier and more resilient supply chains.

Get in touch with us today to discover how we can help foster your supplier relationships, strengthen your cash flow and help your business grow.

Matthew Board is the Founder and Managing Director of broker.com.au and leads a team of business finance experts connecting borrowers with the right funding solutions to optimise their operations.

Disclaimer: These comments are only our views and should not be construed as advice. You should act using your own information and judgment. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgment as at the date of publication and are subject to change without notice.

Proven strategies for successfully growing your business

Posted on November 28, 2024December 2, 2024 by Russell Walsh

There are many ways to grow a business – organically, strategically, through innovation or expansion. While growing your business can be exciting, the path forward isn’t always clear. But with the right business growth strategy in place, you can sustainably increase revenue, expand your customer base and even enter into new markets.

Octet is here to support you on this journey, providing finance and payments solutions to turn your growth goals into sustainable success. Read on as we explore how to find your best direction!

Key ways to grow a business

To understand how a business can grow effectively, we spoke with creditte founder and director Morgan Wilson, who has extensive experience helping businesses grow through various financial methods and operational efficiencies.

He lists the following methods as solid strategies for business growth.

Organic growth: This includes increasing sales, improving customer retention and entering new markets.
Inorganic growth: Mergers, acquisitions or partnerships with complementary businesses can provide significant growth opportunities.
Innovation: Introducing new products, services or processes that differentiate the business in the market.
Market expansion: Tapping into new geographic locations or targeting new customer segments can broaden a business’ reach.
Diversification: Expanding into related or new industries to create additional revenue streams.

As Morgan highlights, successful business expansion requires more than just ambition; it demands a well-thought-out action plan that addresses specific goals. When developing an action plan for business growth, each method needs careful planning and a strategic approach.

Which business growth strategy is right for you?

We know that having a thorough strategy is crucial. So, which strategy is right for your business and its direction? It could well be the million-dollar question.

“A structured business growth strategy aligns your resources, goals and actions, ensuring that all parts of your organisation are working towards the same objectives,” says Morgan. Let’s explore this further.

Positive strategies

Consider these effective business development growth strategies.

Focusing on customer retention: Delivering exceptional customer experiences encourages repeat business.
Increasing average transaction size: Upselling and cross-selling to existing customers is often more effective than acquiring new customers.
Improving sales processes: Streamlining the sales funnel can enhance conversion rates and boost revenue.
Expanding product or service offerings: Innovation around core offerings can lead to new revenue streams.
Targeting new markets: Exploring untapped geographical or demographic markets can accelerate growth.

Morgan advises businesses in the growth phase to prioritise planning. “Be deliberate about what you do – don’t simply pursue growth for growth’s sake.”

Common pitfalls

It’s important to also familiarise yourself with potential issues to ensure you take the right direction with your planning. Common pitfalls include:

Resource misallocation: Investing in initiatives that do not yield returns or align with the business’ overall vision can drain valuable resources.
Operational inefficiencies: If growth isn’t properly managed, businesses may experience stretched operations, resulting in poor customer service or operational breakdowns.
Cash flow issues: Rapid expansion often requires upfront investment, leading to liquidity problems without careful planning. A robust strategy can help mitigate these risks by ensuring effective resource management and financial stability.
Burnout: Morgan notes, “We often see business owners without a strategy ultimately working for the business rather than the business working for them.”

Proper cash flow management is key to sustaining growth. It ensures that working capital can support operational needs as you scale. Furthermore, staying flexible in your approach allows for necessary adjustments in response to market changes.

Incorporating technology, marketing and strategic investments into your business growth plan can also enhance your potential. Automation and data analytics streamline operations and reduce costs, while digital marketing strategies can expand your audience reach at minimal expense. Additionally, strategic investments in equipment, technology and talent are crucial to support scalable growth without overextending your resources.

The right financing strategies for growth

Access to the right finance solutions is essential for implementing effective business growth strategies. With the right financial product, businesses can unlock their potential for advancement. At Octet, we offer a suite of innovative working capital solutions, including Debtor Finance, Trade Finance and Term Loans.

Debtor Finance enables businesses to use outstanding invoices as collateral to maintain steady cash flow. This is crucial for managing expenses and investing in growth opportunities, especially for those facing extended credit terms. With debtor finance, businesses can execute their financial plans more effectively, reducing uncertainty from delayed customer payments.

Trade Finance supports domestic and international transactions by providing funding to purchase inventory or services. This ensures that companies can meet demand without straining cash flow, allowing for immediate payments to suppliers while repaying their financier at a later agreed date. Additionally, securing competitive exchange rates upfront can protect against currency fluctuations and solidify your bottom line profitability.

For other business growth requirements, our Term Loan provides structured funding for capital investments, expansions or significant purchases. It offers a predictable repayment schedule, aiding strategic planning and enhancing financial stability. In conjunction with either Trade or Debtor Finance, businesses can use term loans to invest in assets, cover operational costs during slow periods or consolidate existing debts.

Getting your business growth plan right

By integrating these financial tools and products into your business growth plan, you can confidently navigate growth opportunities and build a sustainable future.

Ready to advance your growth goals? Contact us today for tailored supply chain finance solutions.

Morgan Wilson is the Founder and Director of business advisory service creditte. Throughout his career, Morgan has delivered accounting, taxation and business advice to small, medium and large enterprises around Australia.

Disclaimer: These comments are only our views and should not be construed as advice. You should act using your own information and judgment. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgment as at the date of publication and are subject to change without notice.

How to manage business growth for sustainable success

Posted on November 6, 2024December 2, 2024 by Russell Walsh

Managing business growth is a challenge many companies face. Whether your growth is planned or occurs rapidly due to external factors, handling it well is critical to ensuring long-term success. From maintaining cash flow to addressing skills shortages, businesses must implement strategies that support sustainable growth.

This article explores how to manage business growth effectively and address expansion challenges, particularly for businesses in rapid growth phases.

What is business growth?

Business growth refers to the expansion and development of a company, whether through increased sales, market share, assets or workforce. So whilst growth generally signifies a positive trajectory, its meaning can vary significantly among different organisations depending upon their objectives.

Working capital specialist Neil Tunstall is the Managing Director at Thane Commercial. He highlights that the motivations behind business growth can vary. “There are so many different factors that impact every business, and each one is different. What are the objectives of the owners? Are they looking to create a very successful large organisation, or are they more comfortable with slower and more gradual growth?”

Neil advises businesses to take a strategic approach to achieve sustainable business growth. “Make sure you are working with your advisors and accountants, and put intellectual effort into forecasting,” says Neil. “Don’t just say we’ll grow by 10%; it needs to be strategic.”

Managing sustainable business growth involves setting clear objectives, understanding market dynamics and collaborating with financial experts to create a well-informed growth plan that aligns with the business’s unique vision and goals.

So, why is growth important in business? Growth is essential because it can contribute to profitability, increased market share and more competitive advantage. It allows businesses to innovate, expand offerings and attract investment. Sustainable growth fosters resilience, helping companies adapt to market changes while enhancing their long-term stability and success.

What is a good percentage for business growth?

A good business growth percentage varies depending on factors like economic growth, industry, company size and maturity. For many companies, an annual growth rate of 10% to 15% is considered strong and a particularly good growth rate for small to mid-sized businesses.

How to sustain business growth

Managing business growth can indeed be a challenging endeavour. To ensure sustainable growth, adopting a clear and actionable framework is essential. The following steps are a roadmap for how to manage growth in business:

Set clear and achievable goals: Defining realistic objectives aligned with your business resources is crucial for maintaining focus. Neil says, “Businesses need to be looking two to three to four years out, creating a roadmap with forecasting that includes the right structures.” This foresight allows organisations to plan their growth trajectory strategically.
Train and develop your team: Equipping staff with the necessary skills to handle increased workloads and embrace new technologies is vital for sustainable growth. Neil says, “A big part of growth is looking at how businesses grow their staff or people, so they come along the journey with them.” Investing in your team ensures they are prepared to contribute effectively to the business’ expanding needs. It’s also important to extend the team to also include key advisors and business partners when necessary.
Leverage financial management tools: Effective budgeting and forecasting tools are essential for managing cash flow and growth capital. Neil says, “You’ve got to make sure that the business has the runway to meet its growing demands.” By using these tools, you can learn how to sustain growth in business and make informed financial decisions that support your growth objectives.
Invest in technology: Digital transformation is essential for business growth because technology enhances efficiency and productivity. Neil advises, “Businesses should visit industry expos and actively engage with industry bodies to see what their competitors are doing to keep up with technological advancements.” Embracing digital and technical transformation enables companies to adapt and innovate in a rapidly changing market. It’s also important to understand how digital marketing helps in business growth.
Manage your supply chain: Ensuring your supply chain can handle increased demand without bottlenecks is critical for sustaining growth. Neil stresses the importance of evaluating supplier relationships: “What are the terms we’re getting from suppliers? Do we have the right structures in place to grow and meet obligations as they fall due?” A robust supply chain management strategy is essential to effectively meeting customer demands. Knowing how customer experience drives business growth is vital.

By following these steps, businesses can create a solid foundation for sustainable growth.

Leveraging working capital finance

Achieving business growth requires adequate funding, and leveraging tailored working capital solutions can support expansion without straining cash flow. Octet offers several solutions that can help businesses navigate the complexities of growth while maintaining financial stability. Here are three to consider:

Trade Finance: This form of working capital finance helps businesses manage cash flow during expansion by accelerating their supply chain and payment terms. Neil emphasises the benefits of trade finance, saying, “With Octet’s Trade Finance, businesses have the capacity to fund their full trading cycle, ensuring sustainable growth.” By providing immediate capital for inventory purchases and operational expenses, trade finance can bridge the gap between cash outflows and inflows, enabling businesses to seize growth opportunities
Debtor Finance: By unlocking cash tied up in unpaid invoices, debtor finance (also known as invoice finance) offers businesses immediate liquidity to fund growth operations. Neil notes that Octet’s Debtor Finance product is designed to be low-touch for clients: “This allows them to plan growth over the next 12 to 18 months without constantly revisiting credit approvals.” By accessing funds tied up in outstanding invoices through debtor finance, businesses can alleviate cash flow constraints and invest in initiatives that drive expansion.
Term Loan: Octet’s Term Loan is designed to help businesses secure the funds they need to grow. Available with flexible terms ranging from three months to three years, this loan allows businesses to borrow up to $2 million. It’s tailored for both short-term needs, such as bridging cash flow gaps, and long-term investments, like expanding operations or purchasing equipment. With a fast approval process and competitive rates, businesses can manage their finances with greater control and predictability.

Integrating these financial products into a comprehensive business growth framework can help overcome common business growth barriers and navigate the advantages and disadvantages of business growth. This allows companies to thrive and expand in today’s competitive market.

Learn more about how to maintain business growth with Octet

Sustainable business growth is achievable through strategic planning, team development and the effective use of working capital finance. By partnering with Octet, businesses can access the financial support necessary to navigate the key challenges of business growth and capitalise on opportunities, ensuring a thriving and sustainable growth trajectory.

Neil Tunstall is the Founder and Managing Director at Thane Commercial with over 40 years expertise in the banking and finance industry. Specialising in working capital solutions, Neil has built a reputation for delivering strategic financial services, particularly in debtor and trade finance.

Disclaimer: These comments are only our views and should not be construed as advice. You should act using your own information and judgment. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgment as at the date of publication and are subject to change without notice.

Unlocking opportunity: business finance options every broker needs to understand

Posted on September 1, 2024December 11, 2024 by Duncan Khoury

Want to better support your SME clients? Managing cash flow is an SME’s number one priority — cash flow gaps can significantly affect operations and hamper growth. As a commercial finance broker, helping your SME clients identify, measure and bridge cash flow gaps will set you apart.

In this article, we’ll explore some key strategies and tips for managing cash flow. So let’s get started with some insights that brokers can use to proactively suggest tailored financial solutions that help to address cash flow challenges and drive business success for their clients.

Identifying cash flow gaps for your SME clients

Clearly, in order for you to offer solutions to your clients, you have to know what the key issues and opportunities are. Identifying cash flow or finance gaps and adding value to your existing service can really help strengthen your client relationships. And it starts by simply getting curious.

Dan Verdon, Octet’s NSW Director of Working Capital Solutions, says there are some simple questions you can ask your SME clients to identify any cash flow gaps:

Do you want to grow your business, or have you identified growth opportunities, but you can’t make it happen? “If the client is finding it difficult to grow to the next level, it might be because they don’t have the right finance in place,” says Dan. “Innovative working capital solutions can really help here.”
Are you finding you must turn away new business? “The client might tell you that they’re having to say no to orders or sales because they don’t have the working capital or the cash flow to actually service that customer or take care of those additional orders.”
Are your customers taking a long time to pay their invoices? “We often hear businesses complain that some of their customers take a long time to pay. They might be big businesses and good payers, but they take up to 70 days to pay. If you ask your SME clients what their average debt turn is and they say it’s beyond 30 days, that can cause cash flow issues.”

Business finance options

You’ve identified your client’s cash flow gaps and think a working capital solution might be the answer. So, is using debtor finance the best solution or is a trade finance facility the way to go? Could these solutions actually work together to help accelerate cash flow? Ask yourself, what is the best fit for my SME client and their unique supply chain and business requirements?

The good news for you is that there are solutions that can address these cash flow gaps. Today’s businesses have a range of finance products at their disposal, but beyond traditional forms of credit such as bank loans and credit cards, they might not fully realise their options.

Octet provides working capital solutions for SMEs across a range of industries. These solutions help improve cash flow and ensure the smooth operation of a business.

To explore growth opportunities

Debtor finance, also known as invoice financing, is a solution for businesses to access funds tied up in their receivables ledger without the need to use personal security or other collateral. It provides quick access to cash by leveraging unpaid invoices as an immediate cash advance.

A debtor finance facility can provide a robust solution where your client has a good business but encounters cash flow issues due to slow B2B payers.

With a debtor finance product, the financier will effectively lend against the business’ accounts receivable ledger and provide quick access to cash, bridging the gap between when invoices are raised and when they are paid. There’s generally no need for personal security or collateral.

When Skillforce Recruitment needed to overcome cash flow challenges to rapidly scale their operations, traditional financing options couldn’t provide the flexibility they required. The business came to Octet for a range of solutions, including a Debtor Finance facility that ensured predictable cash flow levels to meet payroll, manage operational costs, and seize growth opportunities.

“Octet’s got a proven history of facilitating growth for businesses,” says Dan. “Skillforce is a great example of that.”

To increase purchasing power

A trade finance facility could also be what the business is seeking. This revolving line of credit allows businesses to pay their suppliers quickly, mitigating some of the financial trade risks and allowing them to keep their supply chain moving smoothly. It also allows businesses to explore new trade opportunities.

“When you think of trade finance, many people immediately think of paying overseas suppliers. But it’s just as effective for paying domestic suppliers,” says Dan.

With trade finance, the financier pays suppliers immediately (which tends to keep them happy) and gives the business up to 120 days to repay.

Octet’s trade finance facility was the perfect solution for wellness retailer Go Vita. The business was increasing its number of suppliers and opening new stores but didn’t want its cash flow tied up in the process. The Octet facility allowed Go Vita to pay suppliers without delay while keeping its supply chain moving and the business growing.

Partner with Octet to power your SME clients

So, you’ve established that your client is interested in a working capital solution like a trade or debtor finance facility, but what’s next? Think Octet.

Unlocking a world of business possibilities since 2008, we have the experience to power a range of businesses across many industries. Our clients trust us to handle more than $4 billion in supply chain transactions every year.
We make it easy for commercial finance brokers, especially those who don’t work with these types of products every day. We structure the facility, help promote it to your clients, answer their questions whilst your brokerage reaps the rewards. Learn more about our Referral Partner Program, including the exclusive Qantas Business Rewards referral offer.
Our business clients choose Octet, and brokers refer their clients to us because we provide simple, fair and fast financing solutions. For example, with our streamlined Supply Chain Platform, businesses can track and manage every stage of their supply chain process, improving transparency and security for all parties.
We know your relationships are important, and we will keep you updated so you can continue to leverage the positive relationships you’ve built with your clients. Partnering with an established financier like Octet helps to cement your reputation and credibility.
The process is straightforward. Simply refer your client, and we handle the rest. After the initial meeting, you provide the business’ financials for our review. We’ll then walk your client through the recommended product and provide an indicative offer where appropriate. Once the offer is accepted, we settle the deal and get started. Your clients can then track, validate and authorise every stage of their transaction via our intuitive supply chain platform, enjoying all the benefits of having accelerated business cash flow.

Discover how to partner with Octet today

Octet partners with commercial finance brokers nationwide to help them empower their business clients. Do you have clients who could benefit from smarter working capital solutions? Get in touch with us today to discover how we can power your SME clients’ growth.

Disclaimer: These comments are only our views and should not be construed as advice. You should act using your own information and judgment. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgment as at the date of publication and are subject to change without notice.

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Category: Trade Finance

What is supply chain finance?

Supply chain finance: how does it work?

The benefits of supply chain financing

Do you need supply chain financing for your business?

How Octet can help your business thrive

Discover Octet’s solutions today

Proven strategies for successfully growing your business

Key ways to grow a business

Which business growth strategy is right for you?

Positive strategies

Common pitfalls

The right financing strategies for growth

Getting your business growth plan right

How to manage business growth for sustainable success

What is business growth?

What is a good percentage for business growth?

How to sustain business growth

Leveraging working capital finance

Learn more about how to maintain business growth with Octet

Unlocking opportunity: business finance options every broker needs to understand

Identifying cash flow gaps for your SME clients

Business finance options

To explore growth opportunities

To increase purchasing power

Partner with Octet to power your SME clients

Discover how to partner with Octet today