Market News Archives

How Trade Finance can help businesses navigate supply chain volatility

Posted on April 11, 2025April 12, 2025 by Russell Walsh

Global supply chains have never been more unpredictable. From industrial disputes and global trade tensions to climate-related events like Queensland’s recent Cyclone Alfred – which temporarily closed the Port of Brisbane and disrupted shipping routes nationwide – Australian importers are facing uncertainty on a day-to-day basis.

Around 47% of Australian businesses see themselves as vulnerable to supply chain disruptions, found research by NAB, with rising raw material costs (71%), upstream supply issues (70%) and the need to meet customer expectations quickly (67%) being key challenges. The top five industries most affected by supply chain disruptions include retail trade, food and beverage, wholesale trade, manufacturing and construction, according to NAB.

“Australia is heavily reliant on imports. There’s so much going on globally that impacts us – from ships getting stuck in the Suez Canal to massive disruptions caused by weather events,” says Joshua Richards, Director at Twin Peaks Finance. “Longer lead times and increased costs mean businesses need support, and Trade Finance is the natural solution.”

Why supply chain volatility isn’t going away

The assumption that supply chains are stable has been completely upended in recent years. Many businesses underestimated just how fragile global logistics could be until COVID-19 brought much of the system to a halt.

“Pre-COVID, everyone thought the system was rock solid. You’d buy from China and, three weeks later, your goods were here,” says Rudy Messerschmidt, Director of Working Capital Solutions, QLD at Octet. “But now, businesses are often facing delays at almost every step. It depends on where the disruption hits, but it can blow out your lead time from six weeks to twelve or more.”

McKinsey found that, once companies experience a supply chain disruption, it takes an average of two weeks to plan and execute a response, leaving many businesses exposed to costly delays.

Businesses are facing added complexity, as some suppliers are disappearing altogether, notes Joshua. “That forces business owners to find new suppliers, bringing a whole new set of challenges.

One of those challenges is sourcing from countries businesses hadn’t worked with before COVID-19. While diversification is smart in an uncertain market, it often requires navigating unfamiliar regulatory environments and payment terms – placing further pressure on working capital and impacting business agility.

Building financial resilience through Trade Finance

The risks of supply chain disruption are particularly acute for SMEs, with Australian business confidence reducing in February despite a reduction in interest rates. Fewer Australian businesses feel they could weather the loss of a major supplier or client without financial damage, believing such a loss would put them at risk of insolvency.

The findings underscore just how fragile supply chains remain for many businesses – and why robust financial strategies are essential.

In this landscape, Trade Finance has become an indispensable tool for managing uncertainty. “Trade Finance helps protect the whole system. Businesses face risk at every stage of their supply chain, and Trade Finance takes some of that risk out of the equation,” says Rudy.

“One thing that’s constant in business is that nothing is constant,” notes Joshua. By unlocking working capital tied up in inventory or goods in transit, Trade Finance gives businesses the flexibility to plan ahead.

Proactive finance for proactive supply chain management

For Australian businesses navigating global and local market uncertainty, Octet Trade Finance is more than just a funding tool. It’s a way to manage risk and seize new opportunities in a volatile market.

Trade Finance unlocks working capital tied up in international and domestic trade, enabling businesses to stay responsive in the face of delays and disruptions. As a buyer, you can pay suppliers upfront and repay later. As a seller, you get paid faster – keeping your cash flow healthy and operations moving.

But resilience isn’t just about liquidity – it’s about control. In a period of economic instability and ever-changing exchange rates, Trade Finance can also safeguard against currency fluctuations with upfront FX transparency and locked-in, competitive rates.

Security is another key piece – particularly when navigating the complexities of working with new suppliers in unfamiliar markets. Global trade introduces a host of risks, from data exposure to payment fraud, making robust security and compliance measures essential. Increasingly, businesses are turning to digital supply chain platforms that offer built-in safeguards and full transactional visibility – helping them monitor every step, from procurement to payment.

“Australia is a heavy importing nation,” says Rudy. “As long as we’re importing a substantial portion of what our consumers consume, we’re going to need this kind of funding and security.”

Your global supply chain partner

Octet’s innovative working capital solutions provide the flexibility and support to navigate supply chain management challenges, strengthen supplier relationships and optimise cash flow. Our Trade Finance and intuitive Supply Chain Platform help businesses across a range of industries build resilience in an unpredictable environment.

Get in touch to discover how we can power your business.

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.

Will the Australian federal election affect business financing?

Posted on April 4, 2025April 7, 2025 by Russell Walsh

With Australians heading to the polls on 3 May 2025, business owners are once again grappling with an age-old question: how will the election impact business confidence?

Business confidence often dips in the months leading up to an election day, driven by policy uncertainty and cautious decision-making, making some business leaders hesitant to apply for finance. But Dan Verdon, Director of Working Capital Solutions NSW at Octet, says there’s no reason for businesses to delay funding decisions.

“There is absolutely always a bit of hesitancy in the market around election time, but it’s really the borrowers, not the lenders, who hold back.”

And the data backs him up. While election periods often spark business uncertainty, the numbers tell a different story about their real impact on the economy.

Data shows pre-election lending slowdowns are more perception than reality

The pre-election slowdown in business activity often comes down to feelings, not facts. As Dan puts it, “I don’t think anyone’s ever really been able to put their finger on exactly why there’s that perception that ‘we should do nothing.’ Yes, there’s an election brewing, but we all get up the next morning and go to work.”

Businesses, especially SMEs, often adopt a wait-and-see approach during election periods, delaying key investment and funding decisions. Ahead of the 2019 election, Westpac found 50% of small businesses were worried or uncertain about the impact election policies will have on their operations, delaying decisions such as staffing and investment as a result.

But post-election, there was a quick recovery in SME confidence. Westpac’s post-election survey found that 55% of SMEs were optimistic after the election – up from just 19% beforehand. Ganesh Chandrasekkar, Westpac’s General Manager for SME Banking, described a “palpable shift in sentiment,” with delayed projects fast-tracked.

Dan explains, “Each time an election comes around, there’s always talk about hesitancy and delays. But for most SMEs, elections don’t usually have an enormous impact.”

The data supports this. A recent analysis by investment bank Barrenjoey concluded that Australian federal elections have limited impact on the economy, RBA policy, or confidence. Over the past 35 years and 12 elections, Australia’s domestic equity market has delivered an average annual return of 9%, with only two down years coinciding with elections.

Why the election shouldn’t put business financing plans on hold

For lenders, it’s business as usual. “I’ve never seen the handbrake go up from the lenders themselves,” Dan explains. “It’s more about market sentiment. People are unsure what’s going to happen, so that creates a delay in their decision to proceed.”

In Dan’s experience, the actual funding needs of SMEs don’t disappear during an election cycle. “If you need funds now, chances are you’ll still need a cash flow or working capital solution facilitated by a lender after the election as well,” notes Dan.

While certain industry sectors may be impacted by specific policy changes, such as new import regulations or environmental mandates, the vast majority of SMEs are insulated from major shifts.

“We don’t have a crystal ball, and we don’t know what legislation might change,” Dan says. “But history shows us that most SMEs won’t experience any significant impact.”

Don’t let uncertainty stall your business’s growth

For businesses considering finance in the lead-up to the election in May, Dan offers this advice: don’t wait.

“You’ll still need working capital, you’ll still need to fund growth, and you’ll still face the same opportunities and challenges,” says Dan. “Waiting until after the election to secure business finance may mean missing out on opportunities now.”

Talk to Octet today about flexible funding solutions, including Trade Finance and Debtor Finance, that keep your business moving, no matter what the political landscape looks like.

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.

Is globalisation reversing? How US protectionist policies could impact Australian businesses

Posted on April 4, 2025April 12, 2025 by Russell Walsh

UPDATED 4 APRIL 2025

Trump’s new tariffs target 100+ nations – including a 10% tariff on Australian goods

On 3 April 2025, United States’ President Donald Trump has announced the country will impose tariffs on more than 100 of the country’s trading partners, including a 10% tariff on Australia.

Prime Minister Anthony Albanese said the new tariffs “undermine” Australia and the US’s existing free trade agreement. “Our existing free trade agreement with the United States contains dispute resolution mechanisms. We want to resolve this issue without resorting to using these.”

The sweeping tariffs also include:

34% tariff on Chinese imports on top of the previously announced 20% tariff
20% tariff on the European Union
24% on Japan
26% on India
10% on New Zealand.

In a bizarre move, a 29% tariff has been imposed on Norfolk Island, an Australian territory.

As a result of the tariffs, the market is now expecting a further four rate cuts from the RBA this year, according to the Australian Financial Review, taking the cash rate down from 4.1% to 3.1% by the end of 2025.

Albanese announces new policy measures to counter impact of new tariffs

The Prime Minister has announced five new policy measures to bolster the resilience of the Australian economy in the face of the tariffs. As reported by ABC News, these include:

strengthening Australia’s anti-dumping regime for key sectors like steel, aluminium and manufacturing
$50 million for affected sectors, provided through peak bodies such as the National Farmers Federation, to chase new markets, backed by five new trade missions
an “economic resilience program”, funded by the National Reconstruction Fund, to provide $1 billion in zero-interest loans
pushing Australian companies to the front of the queue for government procurement
and establishing a critical minerals strategic reserve.

Is this the end of globalisation? How US protectionist policies could impact Australian businesses

“The era of increasingly free and extensive international trade, built upon a rules-based system that the U.S. was instrumental in shaping, has drawn to an abrupt end,” Eswar Prasad, a professor of trade policy at Cornell University, told the New York Times. “Rather than fixing the rules that many U.S. trading partners admittedly took advantage of to their own benefit, Trump has chosen to blow up the system governing international trade.”

The International Monetary Fund (IMF) has previously wanted that increased protectionism could hurt global growth. “There is definitely a direction of travel here that we are very concerned about, because a lot of these trade-distorting measures could … ultimately be harmful not only to the global economy, but also hurtful for the countries who implement them,” commented Pierre-Olivier Gourinchas, the IMF’s Chief Economist.

While the impact of the tariffs on Australia’s economic outlook remains uncertain, supply chain disruptions, rising costs and increased competition are likely consequences – issues that businesses must navigate with agility, particularly when it comes to managing cash flow.

UNSW Economist Scott French cautions that even if Australia avoids direct tariff impacts, it will not be immune from the international fallout. “It’s difficult to predict exactly how Australia would be affected,” says French, noting that “trade policy uncertainty from just the threat of a trade war has similar effects on business activity as actual tariffs.”

US tariffs on Canada and Mexico could impact Australia

The US has officially imposed 25% tariffs on Canadian and Mexican goods. These tariffs are expected to raise costs for businesses and disrupt global supply chains.

For Australia, this could result in higher prices and supply delays for goods that pass through or originate from North America. Industries such as manufacturing, automotive and agriculture – which source machinery, components and raw materials from Canada or Mexico – may face rising costs.

Beyond direct costs, the tariffs could reshape global trade flows, with exporters seeking alternative markets, both in and out of the US. Canada and Mexico could redirect exports to Australia, increasing competition for Australian agriculture, energy and metals sectors.

French notes one positive effect for Australia of US tariffs is trade diversion. “Because they raise the price of other countries’ exports to the US, they may make some Australian exports more competitive. For example, the tariffs on Canadian aluminium would have shifted US demand toward aluminium produced in Australia.”

Joshua Richards, Director of Twin Peaks Finance, has already had clients raise concerns about the tariffs. “One of our clients is a major importer from Canada. Almost immediately, they were asking, ‘What does this mean for us? How will it affect our supply? And how do we pivot to domestic supply if we need to?’ They were already considering how to fund a shift to domestic sourcing. It might be more expensive, but it offers greater certainty in securing the product.”

For importers, securing working capital to manage potential rising costs and delays will be crucial. Octet’s supply chain finance solutions can help businesses bridge payment gaps, ensuring they can continue to source essential materials without straining their cash flow.

Australia fails to secure exemption on steel and aluminium exports

In February 2025, President Trump announced a 25% tariff on all steel and aluminium imports, aiming to boost US domestic production by making foreign metals more expensive.

However, AMP’s Chief Economist, Dr Shane Oliver, downplayed the potential direct impact on Australia to the Accounting Times. “Even if Australian exports are not exempted from US tariffs, the direct economic impact on Australia will be minor. Steel and aluminium exports to the US are just 0.03% of Australian GDP and total goods exports to the US are just 0.8 per cent of GDP.”

Instead, he warns of a broader economic risk, stating: “The main threat to Australia would come via Trump’s tariffs leading to less global trade and a hit to Chinese and global GDP, weighing on demand for our exports and hence our GDP.”

How US tariffs could affect Australia’s trade with China

The US has imposed a new 34% tariff on Chinese goods, on top of the 20% tariff announced earlier this year. China is Australia’s largest two-way trading partner, according to the Department of Foreign Affairs and Trade, accounting for 26% of our goods and services trade with the world in 2023-24. During that period, two-way trade with China increased 2.6 per cent, totaling $325 billion.

If the tariffs weaken China’s broader economy, Australian businesses could feel the heat. Diversifying trade relationships will be critical.

However, there are reasons to be hopeful: China absorbed the tariffs of the previous Trump administration and recent economic data suggests resilience in China’s economy. If China maintains steady industrial growth, the impact on Australian exports may be limited. For businesses exposed to these risks, diversifying supply chains and securing alternative funding sources will be critical.

Strengthen your supply chain to navigate uncertainty in global trade

Australia remains highly vulnerable to global shifts in trade policy, with limited influence over American trade policy.

As the new policies reshape global markets, agility and reliable funding are more critical than ever. Octet’s innovative working capital solutions, such as tailored Trade Finance and Debtor Finance, empower Australian businesses to navigate supply chain issues, manage rising costs and seize new opportunities – while optimising cash flow.

Connect with our team today to explore how we can power your business growth through uncertainty.

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.

2025-2026 Federal Budget: What does it mean for small businesses?

Posted on March 26, 2025April 4, 2025 by Russell Walsh

Treasurer Jim Chalmers delivered the 2025-2026 Australian Federal Budget on 25 March 2025, outlining measures aimed at stimulating economic growth, supporting businesses, and addressing cost-of-living pressures.

Despite global volatility, the government remains confident in Australia’s position. “It’s clear the rules that underpinned global economic engagement for more than 40 years are being rewritten. Our economic plan is about ensuring Australians are beneficiaries, not victims, of this churn and change,” said the Prime Minister and Treasurer in their press release.

However, aside from a surprise individual tax cut, the budget delivered limited new support for small businesses. Finance experts and business leaders have provided a range of perspectives on its impact on business owners. While some commend certain initiatives, others express concerns about the budget’s effectiveness and long-term vision.

With some targeted measures remaining – including energy bill relief and ‘Buy Australian’ campaigns – the broader SME community may feel underwhelmed, especially amidst ongoing global uncertainty.

2025–2026 federal budget: Key initiatives for business

The Albanese Government positioned the 2025 federal budget as a long-term investment in economic strength and resilience. The commitments to business and industry include:

$3 billion to support green metals production
$2 billion expansion of the Clean Energy Finance Corporation (expected to unlock $6 billion in private investment)
$20 million for the Buy Australian campaign
Energy rebates for around one million small businesses
$7.1 million to strengthen franchising code enforcement
$165 million in tax relief for hospitality and alcohol producers
$17.1 billion in infrastructure for roads and rail
Up to $3 billion to expand the National Broadband Network

The budget also outlines reforms to improve productivity and cut red tape for businesses and workers:

Banning non-compete clauses for low- and middle-income earners
$207 million to improve Australia’s business register system
Collaboration with states to streamline trade licensing, commercial planning, and construction approvals, supported by a $900 million National Productivity Fund

Energy bill rebates: How do they help small businesses?

As part of the budget, Treasurer Chalmers announced that energy bill rebates of $75 per quarter would continue for eligible Australian households and small businesses until 31 December 2025. This initiative is designed to ease the financial burden of rising energy costs, offering small businesses crucial relief. By reducing energy expenses, it helps businesses maintain cash flow, invest in growth, and sustain profitability. The rebate program aims to support small businesses during challenging economic conditions, ensuring they can focus on operations and expansion without the added strain of escalating energy bills.

Whilst the Clean Energy Council has welcomed the rebate as a necessary short-term relief measure, some experts caution that these rebates only provide immediate assistance, and do not address underlying structural issues in the energy market.

Instant asset write-off slashed: A budget shock for SMEs

One of the biggest surprises in the federal budget for small businesses was that the $20,000 instant asset write-off – a vital tax planning tool for SMEs – will lapse on 30 June 2025. Unless new legislation is introduced, the threshold will fall back to just $1,000.

This change could pose challenges for businesses planning equipment upgrades or expansion, especially in terms of timing and cash flow. “The policy’s future is in serious doubt… the instant asset write-off is now a hotly debated issue heading into the federal election,” said David Adams from SmartCompany.

This move could discourage investment in the second half of FY25 and beyond, or see more businesses turn to alternative finance options as they look to grow their businesses. Working capital finance, such as debtor finance and trade finance, can support affected businesses by providing liquidity for equipment upgrades, reducing cash flow pressure, ensuring operational continuity, and supporting growth.

‘Future Made in Australia’: Government commits to expanding initiative

While the budget provides limited broad-based support for small businesses, the government has reaffirmed its commitment to the ‘Future Made in Australia’ agenda, which aims to strengthen key sectors such as advanced manufacturing, clean energy, logistics, and local production.

This strategy builds on the existing $22.7 billion investment and focuses on ensuring Australians benefit from the global shift to cleaner, cheaper energy. As part of this agenda, the government has committed $20 million to expand the Buy Australian campaign, encouraging consumers to choose locally made products. Additionally, it will apply the Environmentally Sustainable Procurement Policy to $4.5 billion in public sector purchasing, driving innovation in sustainable goods and services.

The government is also prioritising trade diversification, with $16 million allocated to the new Australia–India Trade and Investment Accelerator Fund. This initiative aims to open new commercial opportunities for Australian firms in India, supporting broader economic engagement in the region.

What’s next? The year ahead for small businesses

While the 2025 Federal Budget presents an optimistic outlook and includes measures like energy rebates and tax cuts, many experts believe it lacks substantial, long-term reforms needed to drive economic growth and competitiveness. Calls for more targeted support, particularly for small businesses and the tech sector, highlight concerns that the budget may not fully address current economic challenges.

While the government’s ‘Future Made in Australia’ agenda provides a clear direction, many businesses may still be looking for more immediate, practical support. Rather than waiting for policy to catch up, business owners will need to stay focused on what’s within their control.

Octet’s innovative financial solutions offer Australian businesses the flexibility and control to manage rising costs, optimise cash flow, and seize new growth opportunities. Contact us today to discover how we can power your business.

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.

Supply chain management issues and challenges: what lies ahead in 2025

Posted on January 13, 2025January 22, 2025 by Russell Walsh

Resilient supply chains are critical for business continuity. However, with global challenges intensifying in 2024, businesses head into the new year facing an ever-increasing list of potential risks to their sourcing and inventory strategies.

The COVID-19 pandemic highlighted critical vulnerabilities in supply chain operations, pushing companies to prioritise risk management as a strategic advantage. However, several years later, FTI Consulting research shows that nearly 40% of companies need greater contingency plans for supply chain disruptions.

So, what now? In this article, we explore the key global and local supply chain management issues and challenges projected for 2025 and provide strategies to enhance supply chain resilience now and into the future.

Key events creating supply chain issues in 2025 and beyond

So, what are the major local and global issues likely to impact supply chains and business operations in 2025? Let’s explore them.

Elections and summits

November brought significant global events with far-reaching implications for supply chains. The G20 summit prioritised social inclusion, global reform and sustainability, while COP29 reinforced international efforts to combat climate change. In addition, it’s still unclear how the re-election of Donald Trump in the US, and his “America First” policies, will affect trade around the world.

These events will undoubtedly create global supply chain challenges and opportunities. As we approach 2025, uncertainty looms over the impact of anticipated new tariffs, trade barriers, regulations, labour laws and environmental standards, posing both challenges and opportunities for supply chain managers worldwide.

Conflict and tension

2024 was marked by ongoing conflicts in the Middle East and Ukraine, trade disputes, geopolitical tensions and sanctions. Supply chain managers are bracing for more of the same in 2025.

Several key geopolitical flashpoints are located near critical shipping chokepoints, including the Suez Canal, the Straits of Taiwan, and Malacca. The absence of a unified US foreign policy has left no framework for mitigating or resolving these tensions. Combined with the growing nationalism of China, Russia and India (which has a trade agreement with Australia), conflict and tension are set to increase.

Economic uncertainty

Inflation, currency rate fluctuations, and changing interest rates are critical global issues affecting supply chains. These economic issues make it challenging to predict pricing and maintain profitability, and they are expected to persist well into 2025 amid global uncertainty.

2024 was the year of elections, with voters in more than 70 countries going to the polls. How these elections affect supply chains is still to play out, but election-driven policies can increase or decrease demand in certain industries. 2025 will undoubtedly be a year of economic uncertainty for many.

Climate change and weather events

Weather is forecast to be a key challenge of supply chain management in 2025. Economist Impact reports that a billion-dollar weather event (an event that causes US$1 billion in damages) occurs every three weeks. Forty years ago, a billion-dollar weather event happened every four months.

Extreme weather, climate change and environmental challenges increasingly disrupt supply chains, affecting the availability of raw materials, production and warehousing. Weather and climate events can disrupt transport routes, force factories to close, destroy crops and hamper manufacturing. Consumers concerned about climate action are also putting pressure on businesses to adopt more sustainable practices.

Labour concerns

This issue of sustainability goes beyond weather and climate.

Supply chain managers must also increasingly heed the concerns of investors, regulators, employees and customers to measure and mitigate the social cost of doing business. For example, if abusive or unsafe labour practices are discovered along the supply chain, there is mounting legal and consumer pressure to find alternatives or change those practices. The increasing cost of labour in some markets is also an ongoing concern for businesses across a range of industries.

Technology and cyber threats

Increasing cyber threats can significantly undermine supply chain resilience and cause disruptions. The Medibank and Optus breaches of 2022, and the recent MediSecure hack, in which the personal data of 12.9 million Australians was compromised, show how vulnerable even the largest organisations are to these threats. This not only leads to financial loss but also erodes trust among partners and customers.

But it’s not just direct attacks and threats that are a concern Outdated technology lacks the speed, integration capabilities, security features and advanced analytics required to manage supply chain complexities, resulting in delays, errors and inefficiencies. As legacy systems get left behind, we’ve seen organisations such as ANZ, Telstra and BOQ investing heavily in updates to their technology and systems.

Strategies to mitigate supply chain issues

Investing in supply chain resilience requires businesses to navigate geopolitical tension, adopt new technologies and diversify suppliers, which can be challenging and costly. But it is worth it. According to the Wall Street Journal, businesses that invest in supply chain resilience enjoyed a 23% growth in revenue from 2018 to 2023. This compares to the 15% growth their peers enjoyed.

So, how do you, as a business owner or supply chain manager, practically mitigate supply chain risks in 2025? Here are some thought-starters:

Develop a better understanding of your suppliers and the businesses that supply them. Conduct regular audits to identify potential vulnerabilities.
Adopt technology to increase visibility and simplify processes. Artificial intelligence and IoT monitoring can help make real-time data-driven decisions for efficiency. This information can be shared with stakeholders to improve coordination and reduce disruptions.
Build stronger partnerships with stakeholders, suppliers and logistics providers to ensure alignment on risk management.
Collaborate with internal finance and marketing teams to enhance logistics decision-making, helping to manage costs and customer expectations.
Source from multiple suppliers across different geographies to reduce dependency on a single region or supplier. Establish backup suppliers for critical materials and components.
Focus on renewable energy for operations and partner with eco-conscious energy and raw materials suppliers.
Create detailed risk assessments and emergency response plans for disruptions such as cyberattacks, natural disasters or geopolitical conflicts.
Protect supply chain data with multi-factor authentication, encryption and regular security audits.

Octet’s suite of financial solutions also enhances supply chain resilience by addressing key cash flow challenges and promoting operational stability. With our intelligent supply chain finance solutions, you can extend payment terms to suppliers while ensuring your creditors are paid promptly.

Trade Finance ensures smooth import transactions by funding inventory and service purchases upfront, reducing cash flow strain during critical trade activities. While Debtor Finance (also known as Invoice Finance) unlocks funds tied up in unpaid invoices, providing immediate cash flow to manage expenses and invest in growth.

Your global supply chain partner

The challenges in global supply chains are only likely to intensify in 2025 due to an increasingly unpredictable global landscape. However, businesses that proactively invest in robust supply chain strategies can safeguard their operations and position themselves for sustainable growth.

Octet’s innovative supply chain financial solutions provide the flexibility and support to navigate supply chain management issues and challenges, strengthen supplier relationships and optimise cash flow. Get in touch to discover how we can help power your business.

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.

AI in finance: what you need to know

Posted on January 13, 2025January 14, 2025 by Russell Walsh

Artificial Intelligence is rapidly transforming the finance sector, driving innovation in analytics, decision-making and operational efficiency. This evolution isn’t about replacing finance workers but rather enhancing productivity by harnessing AI to tackle repetitive, time-consuming tasks.

Justin Kabbani, an AI implementation coach and keynote speaker, explains: “It’s about getting rid of that 30% of the work people are doing that is mundane, and giving them space to get back to high-value tasks.”

From accounting to procurement and commercial finance broking, AI in finance has the potential to elevate your work and unlock new opportunities. In this article, we explore how AI can be used in finance and its implications for the industry.

AI in finance: core applications

Justin identifies several areas where AI can significantly enhance the finance industry. “Tools like Copilot or ChatGPT help finance teams handle tedious tasks, from generating insights to simplifying client evaluations.” Examples include:

comparing inconsistently formatted datasets from different software systems

quickly performing complete financial analyses, including generating graphs and tables and providing data-driven insights for financial planning

evaluating new clients using discovery questions and providing rationale for decisions

supporting first-stage evaluations of financial or business scenarios

analysing large datasets to detect patterns consistent with fraudulent activity

chatbots and virtual assistants that provide 24-hour customer service, reducing the operational costs of a business

monitoring and ensuring compliance with financial regulations through automated audits

forecasting market trends, cash flow and business outcomes

automating invoice generation, approvals and payments

automating tasks like note-taking during meetings or phone calls, then generating follow-up notes and action items

Justin says harnessing AI doesn’t have to be expensive or difficult. “A lot of the work I do is with off-the-shelf software, Copilot and ChatGPT. These can seem like simple tools, but my clients are applying them to problems and consistently saving hundreds of thousands as a result.

“For example, an accountant-client of mine uses AI to organise and categorise transaction data really efficiently, turning complex tasks into streamlined processes.

“Smaller firms can leverage simple tools like chat functions that translate and document client conversations in multiple languages, enhancing service for non-English-speaking clients.”

Justin reiterates that AI in banking and finance isn’t about replacing staff but rather elevating their roles so they can move from administrative or repetitive tasks to focus on creative and strategic work. “The real promise of AI is in helping us be more human by eliminating menial tasks and unlocking our cognitive potential.”

The challenges of AI in the finance industry

Justin also sees many challenges with AI, but not necessarily from the technology itself. “The biggest roadblock is data privacy concerns,” he says.

“However, Microsoft stands behind the security of information that is processed in the Copilot environment. And the ChatGPT Team and Enterprise versions don’t learn from user data by default and have attained SOC-2 compliance to give businesses further confidence to use confidential data. Companies often apply excessive security standards to AI tools in a way they wouldn’t with other pieces of software they’re using.”

Lack of training is also an issue that limits the potential of AI tools. “People also need to move beyond a 10-word prompt and invest in creating structured inputs that deliver meaningful results.”

The perception that AI adoption is expensive is another issue that is holding businesses back, says Justin. “We’re talking about taking those really menial tasks or administrative tasks and using a program that’s pretty affordable and really quite reliable.”

Harnessing and understanding AI

If you work for a financial firm or are a finance broker and are eager to learn more about AI technology in finance, Justin’s advice is to start from the top down.

“I think the most important way to embrace it and get the most out of it is to start with the CEO and executive team. They need to understand the tools, see their capabilities and experience it themselves. Even half a day of training is enough to get to a level of confidence and competence to use these tools. I think it’s realistic for a team or individual, with three days’ worth of training, to build up that level of competence to be using it on appropriate projects.”

In the years to come, Justin believes the future of AI in finance will involve integrating multiple datasets – such as Google Analytics and CRM data – to uncover unique insights.

Here are some other ways we might be using AI in finance in the future:

AI will enable highly personalised financial services by analysing individual customer data. This will allow for tailored financial advice and products, improving client engagement and satisfaction.

Fraud detection will become even better as AI not only identifies patterns that indicate suspicious activity but also takes action to block that activity in real time.

Predictive analytics will become more sophisticated as AI analyses multiple indicators and datasets to anticipate risks such as economic downturns and geopolitical events. It can then offer strategies to mitigate potential threats.

Octet: your future-ready finance partner

AI is revolutionising the finance industry, offering powerful tools to streamline operations, enhance decision-making and uncover new opportunities. For businesses navigating this transformative era, having a smart finance partner like Octet can make all the difference.

With a deep understanding of business finance and innovative working capital solutions tailored to your needs, Octet is here to support CFOs, business owners, brokers and accountants. Discover Octet’s smarter supply chain finance solutions today to power your business growth.

Justin Kabbani is an in-demand keynote speaker and AI implementation business coach with more than 20 years of experience helping businesses and individuals harness the power of AI.

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.

Financing trends: business game-changers in 2024 and beyond

Posted on September 30, 2024October 17, 2024 by Russell Walsh

The world of finance is evolving rapidly. Disruptive technologies, an increasingly connected financial landscape, and global uncertainty are challenging traditional finance models. The financing trends that have shaped previous years are evolving, while innovative new products are forcing businesses to rethink their approach to funding.

So, what are the trends in financial services that will shape the rest of 2024 and beyond? We explore six key trends that could change the way we all do business.

6 financial services trends in 2024 and beyond

1. Blockchain technology in financial services is on the rise

Blockchain technology, often associated with cryptocurrencies, extends beyond digital currencies to a range of industries and users.

In 2024, its application for supply chain management in small-to-medium-sized businesses is gaining traction. Blockchain-based invoice financing is transforming cash flow management by offering increased transparency, security, and efficiency, which can lead to a reduction in costs and a streamlining of processes.

“A prominent application of blockchain technology is decentralised finance,” says Octet’s Co-CEO, Brett Isenberg. “In traditional centralised finance, consumers and businesses borrow from a bank or via a broker. Decentralised finance challenges this by allowing peer-to-peer exchanges.”

While blockchain tech is currently used in the finance sector, Brett believes its use will increase exponentially in the years to come.

2. The industry is embracing AI and data analytics in financial services

Artificial intelligence (AI) and machine learning (ML), which provide insights and solutions at unprecedented speeds, are being used in tasks such as research and fraud detection. In 2024, there has been an even greater uptake of these tools with AI-driven supply chain management tools being used to help businesses predict disruptions, optimise logistics, and manage inventory more effectively.

“AI and data analytics have transformed the finance industry,” says Brett. “AI algorithms can analyse large data sets to identify anomalies that detect fraudulent activities and measure risks with greater accuracy than ever before.”

These technologies will also be increasingly used to enhance efficiencies, make decisions and improve customer service. “AI-powered chatbots and virtual assistants are getting better and better,” adds Brett. “The technology is also enabling more accurate and dynamic credit scoring by considering a much broader range of factors.”

3. Global growth has remained weak

In late 2023, the resilience of the global economy exceeded expectations, but global economic growth continues to face challenges in 2024. Political tensions, interest rate fluctuations, and economic policies are impacting financial services worldwide. China’s recovery has been weaker than forecast, global core inflation is rising, and high public debt continues in many countries. These factors had led the OECD to project lower global growth in 2024 compared with 2023.

In Australia, the Reserve Bank has kept interest rates on hold since November 2023, despite political pressure for cuts.

“This decision reflects ongoing concerns about inflation and economic stability”, states Brett. “Globally, many countries have cut rates to stimulate growth, but Australia’s unique economic conditions have led to a different approach.”

As such, businesses of all sizes must navigate these complexities to manage their cash flow and investment strategies effectively.

4. Increasing cybersecurity concerns

As financial transactions become more complex and frequent, cybersecurity remains a critical concern.

In 2024, Australia has seen a significant rise in data breaches, with notable incidents affecting millions of individuals. The Office of the Australian Information Commissioner (OAIC) reported a 9% increase in data breach notifications in the first half of 2024 compared to the previous six months.

Enhanced cybersecurity measures, such as multi-factor authentication and advanced threat detection, are essential to protect assets and maintain trust in financial services.

When combined with disruptive technologies such as AI and a shift to cloud-based systems, financial service providers will have to become more adaptable to protect their customers and offer the best services. Business leaders are being compelled to develop new strategies and explore innovation to counter challenges to security systems.

5. Innovative financial products are more readily available

While challenges are increasing, so too is innovation. The range of financial products available to businesses and consumers is growing, and as more businesses and consumers adopt digital solutions, new technologies and financial services have emerged.

“For example, a growing environmental awareness has increased the focus on sustainable financial products. So, there are now green bonds and sustainable investment funds,” says Brett. “Healthcare supply chain financing is an emerging area too.”

“Another innovation is the tokenisation of assets, which involves converting real-world assets into digital tokens on a blockchain. This has led to the creation of tokenised securities and other asset-backed tokens.”

6. Banks are being forced to embrace change

The banking industry is facing challenges from a slowing global economy, divergent economic conditions and disruption to their general business models. evolving financial landscape. Traditional banks must adapt amid higher interest rates, stricter regulations, climate change and technological advancements. Banks are now having to invest in robust platforms and adopt open banking requirements to collaborate with third-party providers. This shift is essential for improving customer service and engagement, helping banks retain important business customers.

“Traditional financial institutions have obviously been embracing tech for years, but it’s only in more recent times that it’s really pervaded certain products based upon business demand,” explains Brett. “At Octet, we have fundamentally changed the way buyers and sellers engage with each other on one platform — both in a local and international trading context. Traditional banks are also starting to invest in robust platforms and adopt open banking requirements to collaborate with third-party providers.”

Brett says banks are increasingly being forced to improve their customer service and engagement to retain important business customers.

The future of finance

Our innovative working capital solutions help you unlock the power in your business to thrive. Need a cash flow injection without the need for personal asset security? Our Debtor Finance facility allows you to convert up to 85% of your unpaid invoices into immediately available funding.

If it’s a revolving line of credit you’re after, our Trade Finance facility offers up to 60 days interest-free and 120-day repayment terms to pay local and international suppliers.

You can also unlock additional working capital to expand operations, acquire new assets or consolidate existing debt by activating an Octet Term Loan as part of your Debtor or Trade Finance facility.

Discover how Octet’s team of working capital specialists can help power your business growth today.

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.

Federal Budget 2024-25 snapshot and what it means for businesses

Posted on May 15, 2024November 20, 2024 by Russell Walsh

The Australian Federal Budget announcement for 2024-25 presented a number of initiatives aimed at alleviating the cost of living pressures, driving innovation through the ‘Future Made in Australia’ initiative, and addressing various economic and fiscal challenges. Here we summarise the key highlights and provisions of the budget, along with a specific focus on its implications for Australian businesses.

The overall economic and fiscal outlook:

Forecasted real GDP growth of 2% in 2024-25
Expected average inflation rate of 2.75% in 2024-25

With the aid of a $9.3 billion surplus, some of the key measures designed to ease cost-of-living pressures include:

$300 electricity bill rebate for all Australian households
Stage 3 personal tax cuts from 1 July 2024, with an average annual tax cut of $1,888 (or $36 a week)
Personal income tax compliance program extended for one year from 1 July 2027
10% increase in Commonwealth rent assistance
Payment of $5,000 to help meet the costs of leaving a violent relationship
Payment of superannuation on paid parental leave
Investment of up to $3 billion to strengthen the pharmacy sector and keep medicines cheaper

What did the budget deliver for businesses?

The Budget offers little in the way of significant support for small businesses, with the extension of the instant asset write-off being a notable exception. Aside from this extension, it has been reported that business owners have expressed disappointment with the limited relief on energy costs ($325 electricity bill rebate for one million businesses) and the absence of initiatives to stimulate innovation and technology adoption.

Small business support – $20,000 instant asset write-off

Small businesses with aggregated turnover of less than $10 million will be eligible for the $20,000 instant asset write-off for an additional year. This will enable small businesses to immediately deduct eligible depreciating assets costing less than $20,000 that are first used or installed ready for use by 30 June 2025. From 1 July 2025, the asset cost threshold will revert to $1,000.

The $20,000 threshold will apply on a per asset basis, so small businesses can instantly deduct the cost of multiple assets.

Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.

Future Made in Australia initiative

As part of the Budget, the Federal Government has allocated $22.7 billion over the next decade to the “Future Made in Australia” initiative. The bulk of this will be directed towards tax incentives for renewable hydrogen and critical minerals processing. This includes $1.7 billion to support innovation, commercialisation, pilot and demonstration projects in priority sectors. The Government has indicated that this measure aims to provide immediate relief and encourage investment in business assets.

In summary, the Labour Government has stated that the 2024-25 Australian Federal Budget strives to balance key economic priorities amidst challenging circumstances. While efforts to alleviate cost of living pressures and drive innovation are evident, the level of support for small businesses appears to have fallen short of expectations.

Maximising cash flow is crucial for business growth

In today’s uncertain economic climate, maintaining robust financial health is vital for businesses. Tailored working capital solutions not only empower enterprises to seize opportunities during peak seasons but also provide resilience to navigate through slower periods.

Are you seeking innovative working capital solutions to accelerate your business growth? Contact our team of finance specialists today to discuss tailored strategies that help to bolster your cash flow, enabling your business to thrive in any economic conditions.

Disclaimer: The following 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.

Global tensions impacting local supply chain management

Posted on April 17, 2024June 3, 2024 by Russell Walsh

When it comes to complex and interconnected global trade, robust supply chain management practices are increasingly important to ensure your business is operating as efficiently as possible. As your business navigates through current geopolitical turbulence and economic uncertainties, the importance of having strong supply chain strategies becomes even more important. These global issues need to be considered not only in the context of supply chain management, but also in terms of critical external funding and cash flow solutions including supply chain finance, trade finance and debtor or invoice finance.

Impact of recent geopolitical events: Iran Drone Strike on Israel

The recent Iran drone strikes on Israel have sent shockwaves across international borders, igniting concerns over heightened tensions in the Middle East. As geopolitical tensions escalate in this already volatile region, businesses worldwide are left to grapple with the potential repercussions on their supply chains and such critical items as oil, iron ore and other natural resources. With inflation and interest rate volatility still a key concern here in Australia and other countries, robust supply chain management will continue to be a vital tool for mitigating risks and ensuring operational resilience.

By integrating risk assessment practices into your businesses supply chain management, you can proactively identify vulnerabilities and implement contingency plans. From diversifying supplier networks in other regions (or locally where possible) to leveraging advanced technologies for real-time monitoring, you can help to protect your businesses supply chain against geopolitical disruptions. On face value most of these global events appear a literal world away, but the impacts often hit a lot closer to home on real world items such as fuel and shipping container costs.

Strategic importance of China ties in supply chain management

Navigating this scenario could become even more intricate due to China’s involvement. China appears to strive for a delicate equilibrium in its Middle East relations, maintaining robust connections with various stakeholders. Notably, its close ties with Iran have come to the forefront, with reports suggesting Chinese support for Iran’s actions against Israel.

China’s pivotal role in the global economy underpins the strategic importance of its trade relationships. As a leading manufacturing hub and a key player, particularly in Australia’s supply chain networks, China’s economic movements exert significant influence on our fortunes. The interconnectedness of supply chains means that any developments affecting China can reverberate across industries and continents.

For Australian businesses engaged in international trade, maintaining a resilient and diverse supply chain often means spending time understanding China’s economic policies, trade agreements, and geopolitical positioning. The often discussed ‘Chinese housing bubble’, long-term tensions with Taiwan and many other areas have the potential to materially impact the Australian economy, with SMEs particularly vulnerable.

By forging strategic partnerships and adopting agile supply chain management practices, businesses can navigate through uncertainties and capitalise on emerging opportunities in the Chinese market.

Adapting supply chains to global uncertainties

Amidst geopolitical upheavals and geopolitical rivalries, the question arises: How does this affect global and local supply chains? The interconnected nature of modern supply chains means that disruptions in one region can trigger cascading effects across the entire network. From transportation delays to trade restrictions, businesses must contend with a myriad of challenges in sustaining the flow of goods and services.

Effective supply chain management means taking a proactive approach to risk mitigation, encompassing scenario planning, supply chain mapping, and supplier diversification strategies. By fostering transparency and collaboration across supply chain partners, businesses can enhance their agility and resilience in the face of geopolitical uncertainties.

Navigating geopolitical risks: implications for Australian businesses

For Australian businesses, the evolving geopolitical landscape poses both challenges and opportunities. As a nation heavily reliant on international trade, Australia’s economic prosperity is directly linked to global supply chains. The ramifications of geopolitical events, such as the Iran drone strike and geopolitical tensions in the Asia-Pacific region, reverberate throughout Australia’s economy.

From the mining sector to the agricultural industry, Australian businesses must assess the geopolitical risks inherent in their supply chains and devise strategies to mitigate potential disruptions. One emerging trade partner outside of China is India. In 2023 Australia and India signed the historic India-Australia Economic Cooperation and Trade Agreement (IA-ECTA):

making Australian exports to India cheaper
opening up new import opportunities
creating a slew of new job prospects for Australian businesses

The IA-ECTA is but one avenue that your business can diversify its global trading partners, ensuring that global geopolitical risks such as those currently occurring in the Middle-East and from China through Asia Pacific have a minimal impact on the supply chain and ultimately cash flow and bottom-line profitability.

Easing cash flow challenges via smart working capital solutions

In times of supply chain disruptions caused by geopolitical events, your business will often encounter cash flow challenges due to delayed payments or interrupted production cycles. This is where working capital solutions such as trade finance and debtor finance play a crucial role in mitigating financial strain.

Trade finance provides a flexible line of credit to power your businesses international and domestic trade transactions. It helps you manage the complexities of buying and selling goods and services across borders by providing flexible finance solutions tailored to your needs. Trade finance ensures parties involved in the transaction can navigate issues like payment delays, currency fluctuations and credit risks, enabling smoother and more secure trade operations.

Similarly, debtor finance, also known as invoice financing or receivables finance, offers businesses immediate access to cash by leveraging their accounts receivable as collateral. In the event of delayed payments from customers due to supply chain disruptions, debtor finance provides businesses with the liquidity needed to maintain operations and seize growth opportunities.

By integrating working capital solutions into your business’s financial strategies, you can effectively manage cash flow fluctuations arising from geopolitical events, thereby enhancing resilience and enabling cash flow for long-term growth.

Detailed and strong supply chain management practices are critical for businesses seeking to navigate the complexities of global commerce amidst geopolitical uncertainties. By embracing innovative technologies, forging strategic partnerships, and adopting agile supply chain practices, businesses can enhance their resilience and thrive in an increasingly competitive and global economy.

Octet’s tailored working capital solutions have supported many businesses with supply chain finance strategies. Contact our team of experts today for more information on how we can help power your business.

Supply chain issues: trends and predictions for 2024 and beyond

Posted on October 24, 2023May 20, 2024 by Duncan Khoury

There’s no doubt global supply chains continue to face a multitude of challenges that demand innovative solutions. As we head into 2024, continuing disruptions caused by the COVID-19 pandemic, ongoing global tensions, inflationary pressures, supply uncertainty and environmental concerns are all forcing companies to re-evaluate their traditional supply chain models.

So, what are the future supply chain issues facing Australian businesses and their global trading partners? We explore the complex challenges confronting supply chains into 2024 and beyond, and touch on strategies to help organisations adapt and thrive.

6 global supply chain issues and trends in 2024

Many global issues have highlighted the vulnerabilities in supply chains over the past few years, says Octet’s Supply Chain Finance Manager, Joe Donnachie. So, what are the major supply chain challenges and trends as we move into 2024 and beyond? Here are our top six.

1. More circular supply chains

Manufacturers continue to move towards a circular supply chain model as we enter 2024. Gartner reports that in 2023, 20% of tech hardware vendors’ products were associated with circular initiatives. By 2030, that figure will increase to 80%. As businesses in various industries look to re-use and re-manufacture end-of-life products, vendors in the tech hardware industry will be particularly aware of mitigating the environmental impact of their products.

Every business has a different focus on creating a more sustainable supply chain. For some, it’s about making packaging more sustainable. Others will concentrate on the product and incorporate recycled materials into their manufacturing processes. While some businesses will repair, refurbish and recycle their goods to increase product lifetimes.

“Consumer demands have definitely changed,” says Joe. “While inflationary pressures mean most people have less cash to spend on disposable goods, there’s a lot more focus on where the goods come from and the sustainability of those end products.”

2. Ongoing skills shortages

Those in the distribution industry continue to experience talent shortages, affecting production and service delivery. Companies are having to employ technology to help workers access systems easily and securely, while automating routine tasks and creating a positive work culture to attract and retain employees.

As the skills shortage and increasing labour costs continue to affect output, margins are being reduced, and businesses will have to look to AI, digital transactions, robotics and automation to remain competitive.

Joe says an increase in automation and digital documentation requires workers along the supply chain to adapt and gain new skills to incorporate this new technology into their work routines.

3. Increased consumer pressures

While traditional supply chains were a relationship between a business and its suppliers, a recent, more active addition has complicated that relationship — the consumer. According to Forbes, thanks to digitisation, consumers are now more aware of how products are made, where they come from, and other options available to them. This new relationship adds further complexity to supply chain management, and that will only increase in the future.

“There’s a lot more pressure from the consumer,” says Joe. “They’re substantially more conscious of the source of products. I see it in items such as clothing, food and alcohol. For example, there’s now a big shift towards low- or non-alcoholic drinks, and that industry has just boomed over the last three years. All driven by consumer demand and using social media and other tech-driven forums to amplify word of mouth.”

4. Rising inflation and economic instability

The Reserve Bank’s efforts to ease inflation through numerous steady rate hikes have led to economic uncertainty for consumers and a reduction in spending, which will no doubt continue into 2024. Adapting to a changing economy is vital for businesses to stay competitive in the years ahead. All businesses will need to be flexible and prepared to change their services, products and marketing plans to meet consumer demand.

It’s a pressure felt around the globe as other central banks’ efforts to tame inflation continue to dampen economic growth. The IMF reports the factors that could potentially hinder economic growth in the future include the risk of inflation staying high or rising further, the chance of further extreme weather events, China’s economic recovery slowing and an escalation in the Ukraine war, which could lead to even more restrictive economic policies.

The global financial pressures causing supply chain disruptions will not likely ease in 2024, particularly when we consider the current Israel/Palestine conflict in the Middle East.

5. Ongoing supplies shortages

From minerals to medicine, building supplies and grocery staples — supplies of materials around the world failed to meet consumer demand during COVID-19 and in the years that followed.

While the semiconductor supply to the automotive industry is finally improving, chip shortages could still affect manufacturers in 2024 as demand outstrips supply.

Closer to home, medicine shortages are still affecting Australians. The TGA reports that hundreds of medications are in ‘short supply’, with the nation’s pharmacists forced to offer substitutes to their customers.

6. Easing of shipping pressures

Shipping delays, bottlenecks, container shortages and Russia’s war on Ukraine have heavily affected shipping in the past few years, but the outlook is more positive for 2024. International Cargo Express predicts the industry will return to normal in 2024 with new capacity coming into the market, while carriers will balance their supply with new procedures, and ships will become more reliable. There will also be a steadying of freight rates.

DHL predicts a steadying of rates later in 2024, and reports that as new containers enter the market, the industry will enjoy more capacity and an improvement in the reliability of schedules.

Allianz reports the world’s container fleet grew by 6.3% in 2023 and will continue to grow by 8.1% in 2024. Considering congestion at ports is also easing, supply will likely rise.

How to overcome supply chain challenges

As we head into 2024, geopolitical uncertainty, economic pressures and ESG demands are forcing a rethink of conventional supply chain models, which will need to better balance sustainability, speed, responsiveness and cost. So what can businesses do to alleviate supply chain issues, protect their supplier relationships and ensure longevity?

Diversification

Relying on limited suppliers left businesses vulnerable in the years during and after COVID-19. “A solution is to diversify that risk to multiple supply chain sources, and that’s what has really happened over the last few years,” Joe says.

Diversifying a business’ supply base is, in theory, a great idea, but Joe warns it’s not as simple as it sounds. “It comes back to how dependent businesses are on a particular product or component coming into the country and whether or not they have the ability to, say, start setting up a workforce in another country, which obviously has its own tax implications and regulations. What is the competition in that area as well? These factors make it very challenging, but necessary, to diversify your supply chain.”

Analytics

All businesses should be looking to implement a digital supply chain that takes advantage of analytics and uses consumer data to inform decision-making. By aligning supply with real-time demand, businesses can ensure more products are delivered on time while offering exceptional customer service and minimising costs, such as warehousing and storage.

AI and Robotics

Forecasting has always played a role in supply chain management, as it enables businesses to plan for increases in demand, supply shortages and unforeseen events. Now, AI is allowing predictions to be made from massive amounts of data faster and more accurately than ever before. The pandemic showed just how important it is to plan for unexpected circumstances. AI has the potential to become an essential risk management tool.

As the world’s businesses continue to grapple with worker shortages and inflation, they are turning to automation and robotics. Prices of robotics are dropping, and when coupled with AI, can become a powerful and viable business tool.

Other technologies

New technologies are being embraced along the supply chain. 3D printing is allowing businesses to print parts or whole products and reduce reliance on overseas suppliers or vulnerable supply chains. Blockchain solutions are also providing increased accountability and responsiveness along complicated networks. Blockchain technology could centralise and streamline processes in an industry such as shipping, which requires considerable documentation and complex procedures.

Maximise your supply chain performance with Octet

Octet’s supply chain finance solutions power your business to thrive, no matter what supply chain issues you’re facing. With our secure supply chain platform, you can use your credit or debit cards to ride fluctuations in commodity prices and exchange rates and make cross-border payments easily.

With our Debtor Finance facility, you can access up to 85% of your unpaid invoices to boost cash flow in your business and capitalise on opportunities. Need to increase your purchasing power? Our Trade Finance facility is a convenient line of credit that allows you to pay both local and global suppliers with up to 60 days interest-free and 120-day repayment terms. Contact our team of working capital specialists to discover how Octet can help accelerate your cash flow and improve supply chain dynamics today.

Agriculture finance: embrace opportunity and overcome uncertainty in your agribusiness

Posted on September 18, 2023May 20, 2024 by Duncan Khoury

With the breaking of the three-year east-coast drought in 2020, many agricultural regions shifted from poor to good conditions in a single season – and years of record-breaking production have followed.

However, the challenges and uncertainties for agribusinesses remain, and climate variability isn’t the only thing Australian primary producers, and the businesses that support them, need to manage. In this volatile and unpredictable environment, the right agricultural finance is vital for agribusinesses to manage the numerous challenges and thrive.

Here, we examine the key obstacles facing Australian agriculture and explore the agriculture finance options that can best support agribusinesses into the years ahead.

Agribusiness finance: the unique needs of Australian agribusinesses

Australian agricultural activity covers 427 million hectares of land, which equates to more than half of Australian land use. The sector accounts for 11.6% of goods and services exports, and the most recent data suggests it employs about 239,000 people nationally.

It’s an extraordinarily diverse industry that plays an important role in the broader Australian economy – and those operating in the sector face a unique set of challenges.

Agriculture is an inherently seasonal industry. It’s also vulnerable to risks ranging from the weather to supply chain disruptions and natural disasters. There can be high upfront and ongoing costs for insurance and maintenance, as well as long investment cycles.

We spoke with Octet’s Supply Chain Finance Manager, Joe Donnachie, to gain a deeper understanding of the key agriculture industry challenges.

Joe describes the challenges as “incredibly complex and multifaceted. Australia has recently gone from fires to floods and back again. We’ve had population change, volatile food prices and record price peaks. Then you’ve also got shifting dietary demands, which plays directly into the agri space.”

Something that has also significantly impacted agribusinesses in recent times is staffing issues. “Australia’s closed borders during COVID meant that the regular stream of backpackers couldn’t emigrate, and particularly in the Northern Territory and Far North Queensland, they simply didn’t have enough workers to properly staff farming operations.”

In addition, farm loan interest rates in Australia have obviously been rising, and inflationary pressures and tariffs have been wreaking havoc.

“In 2020, China imposed tariffs on Australian barley and a range of other agricultural commodities,” Joe says. “That alone wiped out around $1.2 billion worth of trade a year. In August 2023, the barley tariff was lifted. However, wine, seafood and red meat are all still subject to those restrictions.”

An intelligent supply chain finance partner can add some certainty to the equation in these highly variable and volatile conditions. “It can give a degree of certainty for an agribusiness when it comes to managing cash flow. A tailored working capital facility can assist with the uncertainty and ensure there is sufficient funding to tackle cash flow issues and take advantage of growth opportunities when they arise,” Joe explains.

Agriculture loans: the limitations of traditional finance

Banks were traditionally the first consideration for agribusiness lending, with an overdraft providing a general line of credit.

Traditional bank lending can come with several limitations, however, including:

Speed: Banks often have slow loan approval processes, meaning you could miss out on time-sensitive business opportunities due to delayed funding.
Restrictions: Traditional bank loans can come with restrictive covenants and fixed limits on funding. These limitations might not align with the dynamic nature of your business, especially in a rapidly changing sector like agribusiness.
Security: Banks typically require specific forms of collateral, which might not fit well with the unique structure of your business. This can be particularly relevant for agribusinesses with complex ownership arrangements.
Technology: Many traditional banks lack user-friendly and streamlined digital platforms for financial interactions. In contrast, non-bank lenders often provide innovative technology solutions that better suit a business’ supply chain needs.

Joe also explains that the challenges most agribusinesses face “make consistent profits year in year out unlikely, and annual profits difficult to forecast”. This can then act as a barrier when applying for traditional bank finance.

Better finance solutions for agribusinesses

These days, innovative finance products and non-bank lenders are available to help agribusinesses both survive and thrive. Octet provides a range of working capital solutions to power Australian agribusinesses, including:

Trade Finance: This solution is a great way to bolster your business’ purchasing power, with a revolving line of credit, allowing up to 60 days interest free and 120-day repayment terms.
Debtor Finance: This facility enables you to access unpaid business invoices as an immediate cash injection quickly and efficiently. Octet can help you convert up to 85% of invoices to immediately boost cash flow.
OctetPay: This allows you to use your credit or debit cards to pay any supplier invoice to an extensive list of countries and currencies. Access market-leading FX rates, Octet’s supply chain technology, plus standard credit card rewards points with this intelligent solution.

When exploring an agriculture finance solution, Joe recommends simply choosing a product that best suits your business. “Don’t be pigeonholed into one product if it’s not suitable – especially where a lender has only one type of facility available. Understand the working capital requirements and the total cost of the facility. Make sure that when it boils down to marginal cash flow, that the facility works for you, and is commercially viable.”

Case study: Trade Finance solutions for a grain trader

One of Octet’s loyal clients, a prominent grain trader, had the opportunity to procure substantially more stock. The business had existing bank loans, however, to obtain another line of credit to purchase the additional grain, their bank would take about six months to provide an answer. Given the cyclical nature of the business, that just didn’t work.

So they discovered Octet, who, in a matter of weeks, provided a $2 million Trade Finance line of credit that didn’t impede upon the client’s existing bank facility. The business used the funds to efficiently pay their grain suppliers and local transport companies that moved the grain.

Weather the storms and make hay with Octet while the sun shines

Your agribusiness needs a strong and flexible finance partner to grow and flourish. Explore Octet’s range of working capital solutions to find the right product for your fast-growing operation. Contact our team of supply chain finance specialists today.

Federal Budget 2023/24 – snapshot

Posted on May 10, 2023May 20, 2024 by Duncan Khoury

After a simple summary of the 2023-24 Budget handed down by the Federal Government, and what it means for you and your business?

We’ve got you covered, as Treasurer Jim Chalmers has presented the Labor Government’s first full year budget, outlining a range of key measures.

The announcements focused on easing the cost of living over the coming years, addressing the challenges of a slowing economy, and bolstering the healthcare system.

Treasurer Chalmers highlighted a few key economic forecasts, including

GDP – Real GDP growth is expected to be at 1.5 per cent in 2023-24, before rising to 2.25 per cent in 2024-25
Falling Inflation – Government predicts inflation has peaked and is starting to moderate. Inflation is projected to fall to 3.25 per cent by 2023-24 and will return to the Reserve Bank’s target band of 2-3% by 2024-25
Cost of Living – The first initiative is targeted at reducing energy bills for eligible Australian households. The second initiative announced was the establishment of the Household Energy Upgrades Fund to support home upgrades that improve energy performance and save energy.

The Labor government surprisingly announced a surplus for the 2022-23 financial year of $4.2 billion, which represents significant turnaround from the projected $36.9 billion deficit forecast in the October 2022 Budget. There is an expected deficit of $13.9 billion in 2023-24.

What did the budget deliver for small businesses?

A $20,000 instant asset write-off for small businesses with annual turnover below $10 million will be in place from 1 July 2023 to 2024.
A new Small Business Energy Incentive will also be introduced, providing businesses with turnover less than $50 million with a bonus 20% tax deduction for eligible depreciating assets up to $100,000 for energy saving upgrades.
The Budget will also provide $23.4 million to support small businesses to build resilience to cyber threats.
Support to help SMEs compete for tenders and improve SME awareness of federal government contracts
Cash flow support by halving the GDP adjustment factor to 6 per cent (applied to PAYG and GST instalments).

Accelerated cash flow of utmost importance

In these still turbulent economic conditions it is critical for a business to be on top of its finances. Having a strong working capital base to not only take advantage of opportunities in peak seasons, but also ride out the slower periods, will often be your biggest competitive advantage. Want to understand what the best working capital solutions are to help accelerate your business growth? Contact our team of finance specialists today.

Future focus: 10 key trends in Australia’s food and beverage industry

Posted on January 25, 2023May 20, 2024 by Duncan Khoury

Over the past few years, the food and beverage industry in Australia has faced a series of events that seem to be growing in intensity. The global pandemic created supply chain challenges and skills shortages, while political tensions and social unrest continue to send shockwaves across global markets. The growing urgency of the climate crisis is also putting pressure on consumers and manufacturers to act now to create a sustainable future for their businesses and the world.

Although it’s been hit hard, the food and beverage industry has remained resilient. According to an October 2022 report, the global industry grew by 8.7% from 2021 to 2022, and this growth is set to continue. Whilst the Australian Food and Grocery Council reports that the local industry has the potential to become a $250 billion powerhouse by 2030 — double its current size.

However, for your business to claim its share of the pie, you need to clearly understand the specific challenges and opportunities that exist in the industry today.

Let’s explore the most significant trends in the food and beverage industry and uncover how you can overcome these challenges to harness current and future opportunities.

10 trends that will shape the future of the food and beverage industry in 2023 and beyond

Supply chain challenges to continue

Supply chain disruptions will continue to be one of the most significant challenges in the food and beverage industry in 2023. Although the days of domestic lockdowns are gone, disruptions to the global supply chain remain, with Toll Group Managing Director, Thomas Knudsen revealing that supply chain issues are likely to persist in 2023.

The Russia-Ukraine conflict has greatly impacted supply chains, with economic sanctions, undersupply of products and a surge in commodity prices affecting the food and beverage industry worldwide.

Congestion and backlogs in ports around the world are also causing delays in supplying key ingredients. This has forced many food and beverage organisations to develop workarounds, such as formulating alternative recipes to continue production without key ingredients. They are also adopting circular supply chain models and embracing technological innovations, such as AI to streamline processes and gain more control of their supply chain.

Food inflation forecast to increase

According to the Australian Trade and Investment Commission, global food prices have risen by 31.1% and are at their highest level since 2011.

Fruit and vegetables have experienced the biggest price increase, with data from Deakin University suggesting that fresh produce has risen 6.7% in just over 12 months. This is being driven by a number of local and global factors, including flooding, supply chain issues and rising fuel and transportation costs.

This inflation will have varying impacts across the food and beverage industry. While it’s good news for large supermarket players, others in the industry may well feel the price squeeze.

And given the integral role of food and beverage products in the hospitality industry, rising food inflation is a critical factor to keep an eye on. For example, restaurants typically increase their menu prices when ingredient costs rise, but if wage inflation doesn’t keep pace, price increases may dampen consumer demand.

Staff shortages set to linger

Staff shortages are another pressing challenge in the food and beverage industry today. According to the latest ABS Business Conditions and Sentiments report, accommodation and food services businesses were the most likely to report difficulty — 51% of businesses stated they were struggling to find suitable staff to fill jobs.

Low unemployment rates and a continued shortage of international workers has meant a critical undersupply of staff, forcing some businesses to reduce hours due to a lack of workers.

What was an emerging issue in the hospitality industry back in 2020, is still one of the current trends in the food service industry in 2023. And, as per warnings from KPMG, it may remain a concern for the next three to five years.

Conscious consumers to drive growth

Rising consumer concerns about environmental issues and sustainability are also forecast to drive food and beverage industry growth.

Deloitte’s 2022 Sustainability & Consumer Behaviour survey found that consumers are placing sustainability at the centre of their shopping decisions.

Consumers are making efforts to choose seasonal and local produce and reduce carbon emissions, making small and independent businesses more attractive options.

Packaging is another area that’s coming under increased scrutiny, and the food and beverage industry is taking action on this trend. A recent McKinsey global survey of packaging purchasers across industries reported that 75% of organisations have already made clear sustainable-packaging commitments.

Uptake of digitalisation and automation to increase

Creating efficiencies and cost-cutting while maintaining quality is one of the many challenges in food industry finance. In 2023, organisations will be looking to digital and automation technologies to solve some of these challenges, from digital expiration date labels, sensors that gather data on machine performance and analytics that assess shelf life and product traceability.

Technology in the food and beverage industry has come a long way. For example, e-commerce in the food and beverage industry has proliferated to match consumer preferences for online shopping. But the Australian Food and Grocery Council has warned that significant tech development investment in local food manufacturing is required or the industry risks losing ground to imports.

Growth of meal prep kits and food boxes that offer consumers convenience

Meal prep kits are one of the big success stories in the food and beverage industry in recent years, with pandemic lockdowns kickstarting their popularity.

In 2023, amid rising food costs, an increased focus on nutrition and more awareness of the value of reducing waste, meal kits are set to become one of the biggest growth areas in the food and beverage industry.

According to Future Market Insights, the meal kit delivery services market is expected to grow 15% over the next decade to represent a US$59.2 billion sector.

Healthier consumer food preferences to trend upwards

Health concerns are on the rise and people are becoming increasingly focused on what they eat. In a recent Deloitte survey, 93% of consumers said they wanted to eat healthily at least some of the time.

And with consumers becoming more aware of the link between food and overall health, they’re changing their shopping habits accordingly. This means a shift towards fresher produce, less meat and reduced sugar.

Companies can take advantage of this trend, by offering healthier products or adapting existing products for certain diets (such as gluten-free or vegetarian).

Demand for non-alcoholic drinks to keep rising

In line with an increased consumer focus on health, non-alcoholic drink sales have skyrocketed in recent years.

According to the International Wines and Spirits Record, the no- and low-alcohol beverages market has reached US$10 billion and is set to grow by 8% to 2025. This is compared to only 0.7% growth of regular alcohol volume during the same period.

Increased awareness of the value of a balanced lifestyle has fuelled this growth, with millennials and higher-income earners the biggest spenders in this category.

Demand for plant-based and alternative proteins to grow

Plant-based ‘meat’ is set to become one of the biggest growth areas in the food industry in 2023. Already accounting for $150 million in consumer spending, it’s projected to contribute almost $3 billion in domestic sales by 2030.

According to Food Innovation Australia Limited (FIAL), this potential growth represents $5 billion in value-added opportunities and 6,000 new jobs in the sector over the next decade. There are countless opportunities for manufacturers that embrace alternative proteins such as seaweed, nuts and seeds and edible insects.

Payment delays and insolvencies to increase

Rising inflation, increased transport costs, supply chain issues and global uncertainty are putting financial pressure on many organisations in the food and beverage industry. These factors could lead to an increase in industry payment delays and insolvencies in 2023.

Insurance company Allianz predicts an acceleration in business insolvencies globally, and the food and beverage industry has been pinpointed by some as one of the sectors with the highest probability of payment default in 2022-2023.

How to harness opportunities to grow your food and beverage business

Some of these trends need to be overcome and others harnessed. Regardless, these are the tangible actions you can take to help grow and protect your food and beverage business.

Investing in digitalisation and automation technologies

For those in the food and beverage industry, technology is one of the most powerful ways to gain a competitive advantage. For example, automation and robotics can help improve productivity, particularly for food manufacturing businesses. Sensors and predictive analytics can improve competitiveness by reducing water and energy consumption, as well as minimising equipment downtime.

Meanwhile, artificial intelligence and virtual reality can also speed up the product development process within the food industry. E-commerce digital infrastructure allows businesses to better meet the growing consumer preference for online shopping. Online wine retailer Vinomofo is a successful e-commerce business example to take note of.

Adapting products to meet changing consumer preferences

Growth opportunities exist for food and beverage businesses to adapt or introduce non-alcoholic drinks or other products, focusing on health, sustainability and plant-based/alternative proteins, all while promoting convenience.

Sustainable packaging should also be considered. It’s a commitment that Mars Wrigley Australia has made. The creator of Snickers and Milky Way has a goal of transitioning its products to 100% recyclable paper-based packaging by 2025. To do so the company will not only redesign its packaging, but also support recycling infrastructure and educate consumers.

Undertaking robust business continuity planning

Global economic uncertainty is one of the most significant challenges facing the food and beverage industry today. To help prepare for future market uncertainty, Food Innovation Australia Limited (FIAL) suggests that food and beverage businesses rethink their business continuity planning, including cash and liquidity planning.

Unlock your business potential with Octet

At Octet, we can help you capitalise on these industry opportunities with our intelligent working capital solutions. Designed for the unique requirements of the food and beverage industry, our smart, fast and flexible finance solutions give you the power to leverage opportunities as they arise.

We’ll work with you to unlock your business potential by:

Strengthening your cash flow. Our Debtor Finance solution lets you access up to 85% of the funds from your unpaid invoices within 24 hours. That means you get cash when you need it most to help your business withstand the payment delays forecast to impact the industry in 2023. The result is increased cash flow, more liquidity and — ultimately — less risk for the entire supply chain. For beverage company Saintly, this facility allowed it to grow the brand while alleviating the pressure of cash flow fluctuations.
Helping you ride out pricing and exchange rate fluctuations. Our secure supply chain platform helps to manage the peaks and troughs of commodity-price and exchange-rate fluctuations. It allows you to make cross-border payments with your existing debit/credit cards, bank accounts and Octet finance solutions.
Giving you the flexibility to adapt. Meeting changing consumer preferences requires flexibility. Having cash flow available in line with your invoiced sales lets you evolve your product offerings or invest in food-and-beverage-industry-specific technology without going into uncharted financial territory. With our Trade Finance facility, you’ll have access to a convenient, revolving line of credit (with up to 60 days interest free and 120-day repayment terms) so you can seize opportunities as they arise.
Improving business efficiency. Our working capital solution, Supply Chain Accelerate, allows more sophisticated businesses to access an unsecured, off-balance sheet source of funding, settling 100% of your supplier invoices upfront, while you can repay 30, 60 or 90 days later.
Reinforcing your supply chain. By using Trade Finance as an intelligent procurement tool, you’re also able to take advantage of any available early payment discounts with both local and overseas suppliers. This might allow you to buy extra stock or take advantage of bulk purchases to attain discounts. In turn, this can help you to reduce the potential supply chain disruptions that are forecast to impact the industry in 2023.

Powering the food and beverage industry

Octet provides solutions for all of your supply chain business finance requirements in one central location. We can help you better manage your cash flow, grow your business and leverage both global and local opportunities.

Get in touch today to discover which options will best suit your business.

5 key challenges in the pharmaceutical industry in 2023

Posted on January 15, 2023May 20, 2024 by Duncan Khoury

The Australian pharmaceutical industry has certainly had its challenges in the past year. The ongoing effects of the global pandemic have continued to put pressure on the industry, while rising inflation, geopolitical instability and a shift in workforce behaviours have added to the already burdened sector.

Amid this growing list of challenges, pharmaceutical companies are looking for ways to build business resilience so they can continue to develop lifesaving solutions for patients both locally and around the world.

As we kickstart 2023, let’s take a look at the biggest challenges in the Australian pharmaceutical industry.

Challenge 1 — The skills shortage

The worldwide skills shortage is hitting businesses hard, with 31% of organisations in Australia struggling to find suitably skilled staff in 2022. In the pharmaceutical industry, there has been a surge in demand for STEM-related roles, but reports show the current talent pool is 14% less than demand.

Adding to this challenge is the shift in the way we work. The rise of remote working has caused a spike in employee expectations, with more people opting for organisations that offer flexible working arrangements, hybrid set-ups and remote opportunities.

Organisations are increasingly looking for ways to attract and retain skilled talent and are focusing on reskilling, upskilling and automation to solve one of the biggest challenges facing the pharmaceutical industry today.

Challenge 2 — Clinical trials playing catch up

For pharmaceutical companies running clinical trials for anything other than COVID-19 vaccines, the pandemic caused huge interruptions. And although the primary effects of the pandemic are receding, we’re still feeling the impact as we move into 2023.

Because new drug approvals depend on successful trials, this has meant the loss of a staggering amount of research, drug development and funding. As a result, both the industry and those who fund it have suffered financially, and many are still playing catch-up in their trial programs.

Companies in the pharmaceutical industry are now looking to technologies such as AI and virtual platforms to either restart or recreate trials with less face-to-face interaction. However, this new technology comes at a cost — significantly lowering or even erasing profit margins.

Challenge 3 — Supply chain disruptions

Although the pharmaceutical industry has historically been protected from supply chain disruptions because of high inventory levels, there have been widespread supply chain pressures across almost every sector, particularly over the past year.

ABS data from June 2022 shows that more than two in five businesses (41%) have faced supply chain disruptions, and the Australian pharmaceutical industry was no exception.

There continues to be a strong reliance on raw materials from abroad, with pharmaceutical companies relying heavily on imports from China while also looking to India for generic drug production.

According to the US Food and Drug Administration’s Center for Drug Evaluation and Research, China and India combined account for 31% of FDA-registered facilities around the globe. This heavily dependent supply chain continues to be one of the major challenges facing the pharmaceutical industry, with the drug shortages that peaked during the pandemic being more than likely to continue into 2023.

Many pharma companies are looking to supply chain innovations and circular supply chain models to tackle these challenges and build business resilience. Examples include establishing robust supply chain relationships and networks to better take advantage of market demand and moving to dual or multi-sourcing models backed by intelligent supply chain technology.

Challenge 4 — Cultural focus on prevention, rather than treatment

For humans in general, the cultural shift towards preventing rather than curing many diseases is great news. However, for the pharmaceutical industry, it means a serious drop in funding — both government and otherwise.

As new developments in ‘lifestyle cures’ such as elimination diets, improved sleeping conditions and increasing physical activity become commonplace, consumers are moving away from medication as the primary treatment for disease. With this trend comes lower medication turnover and more roadblocks to securing desperately needed funding.

Challenge 5 — Developing new cures for presently incurable diseases

Identifying cures for presently incurable diseases, such as cancer, Alzheimer’s and epilepsy, is a challenge that the pharmaceutical industry has always faced. Quick solutions are rare, and research and development is a long game.

Here in Australia, the Albanese Government is boosting stem cell research by offering $25 million in grants. This is part of a $150 million commitment over nine years, showing just how big a drive is needed in this area.

But developing new and innovative treatments requires continual and substantial investment. Without it, the goal of discovering cures that work well enough to earn strict regulatory approvals will be difficult to achieve.

Power your business growth with Octet

Although these challenges vary significantly in their origins, the solution to them is often to strengthen business cash flow. Exploring healthcare finance solutions could make a difference in addressing and overcoming all of these hurdles. Access to strong, diverse and reliable sources of cash flow can be a make or break for pharmaceutical companies.

Octet has a range of solutions to help your pharmaceutical business meet the current challenges and grow in 2023 and beyond. That way you can remain focused on serving your customers, not worrying about cash flow. These solutions include:

Our Trade Finance facility, a flexible line of credit that you can use to pay your suppliers earlier at home and around the world, with up to 60 days interest free and 120-day repayment terms
Debtor Finance, which allows you to convert up to 85% of your unpaid invoices into funding within 24 hours
Supply Chain Accelerate, an unsecured, off balance sheet source of funding, which settles 100% of your supplier invoices upfront, while you can repay 30, 60 or 90 days later

Our team of working capital specialists has helped business owners around the country overcome financial challenges, explore new avenues for success and achieve sustainable business growth. Talk to us today about which finance solution is right for your fast-growing pharmaceutical company.

Disclaimer: The following comments are only our views and should not be construed as advice. You should act using your own information and judgement. 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 judgement as at the date of publication and are subject to change without notice.

What the India-Australia trade deal means for your business

Posted on December 29, 2022May 20, 2024 by Duncan Khoury

The International Monetary Fund (IMF) recently downgraded its 2022 global growth forecast to 3.6%. This was largely in response to Russia’s invasion of Ukraine.

But despite the latest global economic challenges, the IMF forecast an 8.2% economic growth rate for India this year. Compare that to the following growth rate projections for:

China at 4.4%
the United States at 3.7%
advanced European economies at 2.8%

It’s no wonder that world leaders have been trying to beat a path to India’s door. And the good news is that Australia got there first.

The two countries signed an interim India-Australia trade agreement on 02 April 2022, with it enterted into force on 29 December, 2022.

Known as the India-Australia Economic Cooperation and Trade Agreement (IA-ECTA), its aims include:

making Australian exports to India cheaper
opening up new import opportunities
creating a slew of new job prospects for Australian businesses

To help your company take advantage of the potential opportunities, we’ve created a guide to the Australia free trade agreement with India. It covers everything from background on the historic trade agreement to what the deal could mean for critical Australian industries.

Understanding Australia-India trade relations

According to the Department of Foreign Affairs and Trade (DFAT), two-way trade in goods and services between Australia and India grew “in value from $13.6 billion in 2007 to $24.3 billion in 2020.”

Additionally, in 2020, India was Australia’s:

seventh-largest trading partner
sixth-largest goods and services export market, valued at $16.9 billion
third-largest market for services exports

As background, India is the world’s largest democracy and has a population of 1.3 billion people.

Over the past decade, India has also experienced significant economic growth, emerging as an influential global player. In terms of purchasing power parity, it has become the world’s third-largest economy.

As stated by DFAT, “India is an attractive market for Australian exporters due to:

a fast-growing and increasingly affluent consumer market
a transforming economy that offers fast-growing opportunities for Australian businesses
an appetite for Australia’s premium products and services.”

Given the opportunities it creates and the fact that negotiations on a trade deal like this originally started in 2011, calling the agreement ‘historic’ is not an overstatement.

Just over a decade ago, the two countries started negotiations for a Comprehensive Economic Cooperation Agreement (CECA). However, despite negotiations undergoing nine rounds, an agreement never eventuated. So both countries agreed to suspend negotiations in 2015.

Then, in June 2020, the two countries formally re-launched CECA negotiations, leading to the recent signing of the interim IA-ECTA in June 22. This Agreement is in force from 29 December, 2022.

Looking ahead, both countries are expected to continue working towards a full Comprehensive Economic Cooperation Agreement.

Man writing on a clipboard while standing in a warehouse full of boxes to be shipped between India and Australia as part of the free trade agreement — The India-Australia trade agreement presents a strong opportunity for Australian businesses. Are you ready?

Business impacts of the India-Australia free trade agreement

The IA-ECTA eliminates tariffs on over 85% of Australian goods exported to India. This figure will then rise to almost 91% of tariffs over ten years. DFAT estimates that this will be “commercially significant for up to $14.8 billion worth of Australian merchandise trade destined for the Indian market each year.”

In return, the Australia-India trade agreement will allow around 96% of Indian imports to enter Australia duty-free.

The IA-ECTA will also have additional benefits for specific Australian industries. Let’s take a look at some of these for each relevant industry.

Agriculture

Overall, Australia’s agricultural industry will win big from the IA-ECTA. However, the agreement doesn’t include some trade-sensitive goods for India, such as beef, dairy, chickpeas and wheat.

The IA-ECTA exclusions for beef and dairy are unlike the China-Australia Free Trade Agreement (ChAFTA) goods provisions, which we explored in our recent article on importing from China. However, despite ChAFTA, China introduced trade restrictions in 2020 on Australian exports of:

beef
lobster
cotton
coal
copper
timber

China also introduced significant tariffs on Australian wine and barley.

While our country’s trade with China heads into unknown territory, the IA-ECTA provides plenty of opportunities for Australian businesses.

According to an Australian Government media release, key IA-ECTA benefits for the agricultural and food industries include:

Current sheep meat tariffs of 30%: immediately eliminated, providing a boost for Australian exports that already command nearly 20% of India’s market.
Current wool tariffs of 2.5%: immediately eliminated, “supporting Australia’s second-largest market for wool products”.
Current tariffs of 150% on wine with a minimum import price of US$5 per bottle (based on Indian wholesale price index for wine): immediately reduced to 100%, and subsequently reduced to 50% over ten years.
Current tariffs of 150% on wine bottles with a minimum import price of US$15 (based on Indian wholesale price index for wine): immediately reduced to 75%, and subsequently reduced to 25% over ten years.
Current tariffs of up to 30% on avocados, onions, broad beans, kidney beans, adzuki beans, cherries, shelled pistachios, macadamias, cashews in-shell, blueberries, raspberries, blackberries and currants: eliminated over seven years.
Current tariffs on almonds, lentils, oranges, mandarins, pears, apricots and strawberries: reduced, “improving opportunities for Australia’s horticulture industry to supply India’s growing food demand.”

In addition, DFAT states that the following preferential tariffs will apply:

Seafood: immediate elimination of tariffs for fresh rock lobster, and elimination over seven years for other fresh, frozen and processed seafood products.
Infant formula: elimination of tariffs over seven years.
Barley, oats and lentils: locked-in duty-free entry for barley and oats, and immediate 50% reduction for in-quota exports of lentils.

Materials

The mining and resources sector will also enjoy significant benefits from the IA-ECTA including:

Coal, alumina and metallic ores, including manganese, copper and nickel: tariffs immediately eliminated.
Critical minerals, including titanium and zirconium: tariffs immediately eliminated.
LNG tariffs: immediately bound at 0%.

Given that India is Australia’s fifth-largest energy and resources market, tariff eliminations are particularly relevant.

According to global law firm, Norton Rose Fullbright, “the growing importance of India to global manufacturing means that Australia’s critical minerals and resources sector can expect greater certainty in the export of minerals required to produce mobile phones and monitors.”

Additionally, Australia is in a favourable position to supply India with critical minerals to power clean energy. These include the minerals required to manufacture solar panels and electric cars.

Pharmaceutical and Healthcare

The agreement is also good news for the pharma and healthcare industries: eliminating tariffs on pharmaceutical products and certain medical devices over five and seven years.

And the IA-ECTA benefits Australian service suppliers too, including business services (medical and dental) and hospital sectors. Specifically, it states that these suppliers will “receive the best treatment accorded by India to any future free trade agreement partner.”

Meanwhile, for pharmaceutical imports to Australia, the IA-ECTA includes provisions stating that the therapeutic goods regulators of each country must work together to facilitate trade.

According to a recent Australian Financial Review article, this means that:

“Australia has agreed to recognise approvals gained by Indian products in major markets, including the European Union, the UK, and the United States, and to speed up the assessment of manufacturing facilities in a similar way.”

Construction and Engineering

The IA-ECTA guarantees that Australian construction and engineering service suppliers will “receive the best treatment accorded by India to any future free trade agreement partner.”

In other words, the agreement will help Australian-based businesses that need employees skilled in science, technology, engineering, maths (STEM) or information technology (ICT).

Under the deal, DFAT also states that Australia will extend access time in the country for former Indian students after completing a:

diploma or trade qualification (up to 18 months)
bachelor’s degree (up to two years)
master’s degree (up to three years) or doctoral degree (up to four years)

An additional year (increasing from two to three years) will be available for Indian students who graduate with bachelor’s degrees in STEM and ICT with First Class Honors.

Finally, the IA-ECTA also sets the foundations for each country to negotiate potential mutual recognition between professional services bodies of:

qualifications
licensing
registration procedures

DFAT states, “Australian professionals such as architects, engineers and accountants will benefit as this framework will help improve the recognition of professional qualifications, and promote two-way mobility.”

Retail and Wholesale

According to DFAT, “India will provide market access for single-brand retailing and franchising, as well as commitments regarding wholesale distribution services.

Australian internet services businesses in India will also have more opportunities to expand their portfolio with a foreign equity limit of 74% for commercial presence.”

Finally, several Indian exports into Australia will have duty-free status, with the following being most relevant to the retail and wholesale industries:

pharmaceutical
clothing
textiles
footwear
leather
gems
engineering goods

How Octet can help to power business growth into Indian markets

The Australian Government’s goals for the IA-ECTA are to make India:

one of the country’s top three export markets by 2035
the third-largest destination in Asia for outward Australian investment

With all the potential on offer for Australian exporters, you might be considering ways to successfully enter the Indian market or expand your company’s existing trade in the country.

Octet can help with both goals. Here’s how.

Boost your cash flow confidence

If you’re looking to enter the Indian market, it’s vital to ensure that your local Australian operation has enough cash flow sustainability to support international growth.

Our Debtor Finance solution lets you leverage your unpaid invoices to get the revenue from your sales faster. You can use it to access up to 85% of your accounts receivable value within 24 hours. And as your business grows, so too does your available cash flow.

Similarly, our Debtor Finance solution can help to fund business growth for exporters who want to expand their presence in the Indian market. This ensures your receive payments from your local buyers within 24 hours – on time, every time. You can then use that money to invest in strategies to grow your market share in India, such as:

developing a new marketing plan to appeal to new buyers
increasing business development activities to build relationships with those buyers
acquiring talent, technology or competitors to increase your competitive advantage

You could also consider our Trade Finance solution, which gives you a convenient line of credit for your business. This innovative solution essentially allows you to:

set your own trading terms, with up to 60 days interest-free and 120-day repayment terms
negotiate early payment discounts with both local and international suppliers
receive your imported goods earlier, and therefore commence the local sales process faster than competitors

Essentially, our Trade Finance solution unlocks working capital. This is essential because the longer the period between your supplier receiving payment and actually shipping the goods, the longer your working capital stays tied up in the transaction.

Simplify your overseas trades

Keeping on top of the steps in your supply chain, from initial enquiry all the way through to product or service delivery, can be a challenge. That doesn’t even factor in coordinating communication between multiple stakeholders.

Thankfully, our intelligent supply chain platform connects every step and stakeholder in a central location to simplify exporting to India.

The platform’s multilingual capabilities let you easily communicate with international partners in their own language. As a result, you’ll save time and eliminate errors.

Plus, we verify all platform members through comprehensive security processes that include:

Anti-Money Laundering (AML)
Know Your Customer (KYC)
Counter-Terrorist Financing (CTF)
Economic Trade Sanctions (ETS).

As a result, you can have complete confidence that your transactions are safe and secure.

Empower your exports

Get in touch today to discover how our working capital solutions can help power your company to take full advantage of the India-Australia trade agreement.

Analysis: The future of finance in the food and beverage industry

Posted on December 5, 2022May 20, 2024 by Duncan Khoury

The past few years have presented the Australian food and beverage industry with exceptional and unforeseeable challenges.

While demand for essential food and beverages will always exist, many businesses in the industry are experiencing significant challenges, primarily due to:

changing customer needs
supply chain disruptions
currency fluctuations
climate change
cost-of-living pressures
skills shortages

Now, more than ever, managing finances in the food industry is crucial to staying profitable and building a resilient business. Let’s take an in-depth look at the challenges facing the food and beverage industry and how businesses in the sector can best manage their risk.

The importance of Australia’s food and beverage industry

The food and beverage sector is Australia’s largest manufacturing industry, accounting for 32% of the country’s total manufacturing turnover. According to the Australian Food and Grocery Council’s 2021 State of the Industry report, the food and beverage, grocery and fresh produce sector is worth $132 billion and employs more than 270,800 people.

And perhaps most importantly, it’s the heart of regional Australia, with 40% of these employees living in regional and rural communities.

Together, these businesses supply a diverse range of products, including:

meat
grains
dairy
fruits
vegetables
seafood
confectionery
beverages (including wine)

And they cover all distribution channels, from retail to food service and food ingredients.

Food and beverage industry challenges

Strong financial performance in the food and beverage industry is vital to the Australian economy, now more than ever.

Some businesses are booming in the current climate, while others’ creativity and ability to adapt amid constant change has kept them going. Regardless of the status of each individual business or their finances, the food and beverage industry as a whole will face five unique challenges in 2023.

Challenge 1: Unpredictable customer patterns

Rising interest rates and cost-of-living pressures will continue to create unpredictable customer spending patterns in 2023. McKinsey found that price sensitivity has continued to grow during 2022, particularly among consumers from lower income brackets. This cohort is looking to save money on food and beverages where they can — even more so than during the pandemic.

This is driven by cost-of-living pressures due to rising inflation, which has reduced incomes and available cash for the weekly grocery shop. Switching to cheaper brands, favouring value retailers (such as Aldi) and seeking out better deals and promotions are ways that consumers might be looking to save money.

Challenge 2: Disrupted supply chains

Disrupted supply chains are currently one of the biggest challenges in the food and beverage industry. Business is also facing pressure to adopt circular supply-chain models. Internationally sourced ingredients and packaging supplies are taking longer than average to arrive, with the ongoing economic unrest causing global supply chain disruptions.

Transport costs have also skyrocketed, and this is putting increased financial pressure on the food industry — both for international and domestically sourced items. For example, Klaus Pamminger, chief operating officer at GrainCorp, said in a recent interview that transport costs have almost tripled in the last two years.

Finding quick cash flow solutions can be a challenge right now for many in the food and beverage industry. Some are considering different supply chain innovations, such as introducing more flexibility into their processes. An example of greater flexibility would be experimenting with different recipes in case key ingredients become unavailable.

Australian food and beverage manufacturers are also pivoting by diversifying their pool of suppliers, incorporating new technologies into their supply chain systems and training their supply chain workers to become more adaptable.

Challenge 3: Currency fluctuations

Even under normal circumstances, currency fluctuations can cause cash flow issues for businesses that either export or source materials internationally.

Currency fluctuations mean many businesses are currently paying more than they usually would for imported goods and services, while also earning less from any exports. Uncertainty has created downward pressure on the Australian Dollar, which dropped 11% against the USD in September 2022. This was its lowest level in two and a half years.

Without the cash flow to cover these often meaningful currency fluctuations, food and beverage businesses increase the risk of negatively impacting their bottom line during this extraordinary time.

Challenge 4: Climate change

Unpredictable weather patterns, such as long periods of drought, major floods and storms, can negatively impact supply chains and production processes. And with climate concerns intensifying into 2023, businesses in the food and beverage industry are challenged to find solutions to combat the associated risks.

Amid growing concerns about climate change and sustainability, consumers are paying closer attention to the personal impact their choices have on the environment. For example, Deloitte’s 2022 Sustainability Report found that 64% of consumers surveyed have reduced their consumption of single-use plastics. But in the coming years, consumers will have no choice. Australia’s states and territories, apart from Tasmania, have either banned or committed to banning single-use plastics — including cutlery, straws, plates, bowls and drink stirrers — by 2025.

In 2023, this increased scrutiny may shift consumer buying behaviour, not only around the products and brands they choose, but also in areas like packaging, sustainable waste reduction and ethically sourced products.

Challenge 5: Skills shortages

The food and beverage industry faces two key challenges in 2023 when it comes to resourcing: shortage of available talent and attrition of existing employees.

Data from the Australian Bureau of Statistics found that almost a third of employing businesses are having difficulty finding suitable staff. And in a 2022 report of the European grocery market, 39% of CEOs said hiring the right talent was a significant challenge over the last year.

Retaining talent is also a big challenge in the food and beverage industry, particularly in hospitality, as people are seeking better conditions. Many employers are considering incentives to attract and retain talent, such as sign-on bonuses, paid time-off and more flexible hours.

How can food and beverage businesses enjoy a cash flow boost in 2023?

Strong cash flow can help F&B businesses weather many of the current challenges. But how do you boost cash flow in such an unpredictable environment?

Our Trade Finance facility gives you access to a flexible line of credit to pay your suppliers earlier, whilst strengthening key business relationships. As it did for online wine retailer Vinomofo, which used the facility to take advantage of local growth opportunities during the pandemic.

Another way to boost cash flow is to leverage the funds tied up in your supply chain via our Debtor Finance solution.

It funds up to 85% of the value of your unpaid invoices within 24 hours. Your cash flow is boosted based on your invoiced sales so that you have the funds available to take action against the impacts of these industry challenges.

Improved cash flow can help you:

Leverage opportunities to grow or pivot. Meeting new market demands or changing your distribution network requires flexibility. Having cash flow available in line with your invoiced sales lets you jump on those opportunities without going into unchartered financial territory. With Debtor Finance, the more you sell, the more finance you’ll generally have available.
Reinforce your supply chain. Freeing up the money in your accounts receivables might allow you to buy extra stock or take advantage of bulk purchases to attain discounts and prevent supply chain disruptions.

Ride out exchange rate fluctuations. Access to increased working capital gives your business flexibility to better respond to currency fluctuations. And using our secure cross-border payments platform gives you upfront Australian Dollar visibility for international supplier payments, so you don’t get any nasty surprises.

Leverage the funds tied up in your supply chain

Trade and Debtor Finance are just two of the ways that Octet can help give your business a working-capital boost. Want to find out about these and other facilities we offer? Learn more about how we can power your food and beverage business today.

What are the best methods of financing a business in 2023 and beyond?

Posted on November 17, 2022May 20, 2024 by Duncan Khoury

As a business owner or director, there will be times when you need to access finance for your business.

You might need finance to grow, to buy stock or to see you through difficult times. But which method of business finance is right for your organisation? In this article, we explore some of the general challenges facing businesses, the traditional methods of business finance and some alternative financing solutions.

Why you need business finance

According to the Australian Government’s business.gov.au website, fluctuations in cash flow can have a serious effect on a business’s viability. As a result, one of the most common reasons a business seeks financial assistance is due to cash flow. But there are many other reasons why a business owner might seek funding. You might need business financing:

to help establish a new business
to purchase or lease property such as a factory or store
to expand a business or begin engaging in international trade
to purchase stock
for investment in vehicles, machinery or other tools and equipment
for research and development
during times of difficulty to help the business survive

New challenges in business finance

The global pandemic and its aftermath wreaked havoc on the world’s businesses, but when we finally emerged from COVID, business leaders and owners faced new challenges.

The smallest SMEs to the largest multinational companies felt the impact of global supply chain issues, increased costs, skilled worker shortages and ongoing global uncertainty. Record levels of inflation and rising interest rates put pressure on households, consumers and business owners alike.

According to a recent KMPG report, business leaders have also been left with concerns about staff acquisition and retention, cybersecurity and digital transformation, the disruption of remote workplaces as well as new technologies. If businesses are to survive in the future, they simply have to innovate.

There is no doubt that the way we do business has changed, and that includes finding new ways to access business finance. The good news is there are a variety of methods available to finance your business. Options range from the traditional, like loans and overdrafts, to the more flexible, like Debtor Finance and Trade Finance.

You’re probably familiar with the traditional funding options, but the more innovative types may actually suit your business better.

Let’s examine the various finance options available.

Traditional methods of financing a business

The Reserve Bank of Australia reports that since the second half of 2021, small and medium businesses have experienced relatively strong growth conditions. As a result, demand is high for business finance. But though demand is strong, businesses face many hurdles, including rising interest rates. This makes accessing traditional bank funding difficult.

So, how do you finance a business? Many business owners still default to familiar, conventional options when they need financing, and there are three basic ways to go about it. It can be achieved by:

using internal funds
organising debt finance
arranging equity finance

Each of these options has benefits and drawbacks. Let’s take a look at each.

Business Financing Method #1 — Internal Funds

As a business owner, you might prefer to fund your expenses and growth through internal funds, such as the cash and savings you already have sitting in your business. These internal funds might come from profits you’ve already enjoyed or by selling assets the business no longer needs. The main advantage of using internal business funds is that you don’t have to take on debt or repay any money to a third party.

However, internal funding or internal financing uses up your company’s available cash or assets, which may cause cash-flow problems later on when it’s time to pay expenses. It may also stifle your business’s growth by keeping you from taking advantage of opportunities that require readily available funds.

Business Financing Method #2 — Debt Finance

Financing your business through debt involves borrowing money from a lender, such as a bank or other financial institution. It most often takes the form of credit cards, overdrafts, lines of credit or loans.

On the plus side, this generally allows you to keep control of your business and profits, because no other parties have any ongoing shared ownership over your business. Plus, the interest paid is often tax-deductible.

The main disadvantage, of course, is that you need to repay the money you borrow — usually with interest. And in the days of rising interest rates, that’s of real concern. The RBA has recently indicated that not only will rates not fall in the near future, they will probably continue to rise.

So, while debt finance can be a good short/mid-term fix, it can also lead to more problems in the future. Many businesses also find it challenging to get debt finance without offering personal asset security, particularly if they’re just starting out or don’t have sufficient equity. But for an established business that is looking for funding to grow, debt finance is often a solid option.

Business Financing Method #3 — Equity Finance

The third popular business capital solution is equity finance, where an investor provides funding in exchange for owning a piece of your business. Typical examples of investors include venture capitalists (professionals who invest in existing companies) and angel investors (individuals who invest in start-ups).

This can be less risky than debt financing, as the investment isn’t a debt you need to repay.

The downside is that you lose control and ownership of part of your business. It can also be hard to find the right investors — people who are both willing to invest and who you want to share future ownership with.

Alternative, flexible business capital solutions from Octet

The pressures and challenges on businesses are changing, but so too are business owners and leaders. According to the report Where Opportunity Lies: Australia’s new small business boom, created by Xero in partnership with Accenture, a new generation of business owners is emerging.

The report shows that of the latest wave of entrepreneurs, 45% are aged under 35. Of those who started a small business recently, 37% were born overseas. Meanwhile, 36% of small business owners are women. The report also reveals that over the next decade, 3.5 million new small businesses are expected to be registered.

Without a solid credit history, this new wave of business owners might find traditional funding difficult to access and will be looking at non-traditional means to launch and grow their businesses.

Alternative, flexible business capital solutions are almost certainly the way of the future.

At Octet, we believe that businesses should ideally be able to fund themselves. Business owners and managers who can think laterally about funding are the ones in the best position to grow.

That’s why ‘funding your own business’ is at the heart of all our financing options. We offer three alternative business working capital solutions:

The right one for you depends on the size of your business and your unique needs.

Business Financing Method #4 — Debtor Finance

Debtor Finance uses the biggest ongoing asset most businesses will have: their accounts receivables. Briefly, this solution lets you convert up to 85% of your unpaid invoices into immediately available funding within 24 hours. This means you can have the funds straight away, without waiting the 30, 60 or 90 days it might normally take your customers to pay you. Just imagine how much that would improve your cash flow cycle!

Better yet, we offer this without requesting you use your property as security, which many banks require. Using the Director’s personal assets as security isn’t an issue when the property market is going well (assuming you own property). But if you’ve maxed out your property equity — or you don’t own any — you do need another option.

Our Debtor Finance solution is available to Australian businesses across a wide range of industries, from newer companies to well-established ones. Ideally, you’ll have an annual turnover of at least $1 million, and at least two years of business operation.

Business Financing Method #5 — Trade Finance

Trade Finance gives you a revolving line of credit to pay your suppliers both locally and in more than 72 countries. Again, we don’t need you to provide personal asset security. Instead, you’re generally securing funding against the strength of your balance sheet, with just a company and director guarantee.

With up to 60 days interest free and 120-day repayment terms, our Trade Finance facility is flexible too. You can use it either as your primary funding source or to supplement your current bank or other financing arrangements. So if your bank can’t offer all the funding your business needs, or you want to diversify streams, we’re happy to help.

To be eligible, your business ideally needs an annual turnover of at least $3 million to $5 million and to have shown a profit for the last two financial reporting periods.

Business Financing Method #6 — Supply Chain Accelerate

Our Supply Chain Accelerate facility is like a hybrid of Trade Finance and Debtor Finance. It links suppliers and buyers in one process to free up working capital, which you could use to invest in supply chain innovation or other business growth strategies. The supplier gets paid 100% of their invoice upfront while the buyer has 30, 60 or 90 days to repay us.

Supply Chain Accelerate is completely unsecured, with no director or company guarantees required. And because it’s an off-balance-sheet source of funding, it doesn’t interfere with you taking out other business loans.

If you’re a supplier, this facility is hugely beneficial when you deal with larger companies that have an extended payment cycle. It means you generally access the credit rating of the bigger company to get paid earlier. Meanwhile, as a buyer, you can take advantage of potential early payment discounts to pay upfront and free up cash flow.

Supply Chain Accelerate is available to larger, profitable businesses with a substantial annual turnover.

Power your business with Octet’s supply chain finance options

Every business, from the smallest enterprise to the largest company, will need access to financing at some stage in their lifecycle. Having reliable, accessible business finance is a must, particularly during times of uncertainty.

The best funding method for your business will depend on a range of factors. At Octet, we help you find the business financing solution that’s right for you. We not only power your business growth, but we also empower you as a business owner or executive with better control over your supply chain.

Our team of supply chain finance specialists have helped Australian business owners and their local and global trading partners access the funding required to succeed. And we’re ready to help you better understand your business finance options.

Ready to take the next step with your business? Let’s take it together… Talk to us today about how to finance your business.

Disclaimer: The following comments are only our views and should not be construed as advice. You should act using your own information and judgement. 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 judgement as at the date of publication and are subject to change without notice.

Supply chain innovation: Why investing in technology could give your business the edge

Posted on September 30, 2022May 20, 2024 by Duncan Khoury

Want to know what the world’s most popular supply chain planning method is?

Spreadsheets.

Yes, you read that right.

A McKinsey & Company survey of global supply chain leaders in 2021 revealed that almost 75% of respondents rely on spreadsheets to do their supply chain planning. However, 61% believe technology enhances their competitiveness, according to a recent Gartner survey. Why, then, isn’t there more urgent investment in supply chain technology innovation?

90% of the McKinsey & Company survey respondents indicated that they plan to adopt a new supply chain planning system in the next five years. However, this may not be fast enough – especially when you consider the second most popular supply chain planning method is SAP’s Advanced Planning and Optimisation software, which they’ll no longer support from 2027.

Companies need to invest in supply chain technology now if they’re going to reap first-mover benefits and not be left behind. But, in upgrading digital supply chain technology, the challenge is not to get swayed by the latest shiny thing. Instead, companies need to choose wisely, based on real business needs.

To help your business find the right solution, here’s an overview of the most promising supply chain tech on offer, and what to consider before investing.

Top supply chain tech to streamline processes

In light of recent supply chain management bottlenecks and the pressure to develop ethical supply chains, investing in technology to streamline processes is worth considering.

But how do you know which technology is right for your business? Let’s explore three types of technology that you can use to create a more efficient supply chain.

The internet of things (IoT)

The Internet of Things (IoT) describes a network of devices that communicate and exchange data wirelessly. IoT can remotely track physical items, such as goods in transit, and monitor environmental conditions, such as the temperature inside a transport vehicle or the moisture content of soil.

When combined with predictive analytics (the use of data, machine learning algorithms and modelling to make predictions), IoT in the supply chain can deliver immense benefits. As just one example, logistics companies can leverage IoT and predictive analytics to deliver real-time route optimisation to their drivers, factoring in goods-on-board, goods-for-pick-up, traffic congestion, distance and weather. This saves time, fuel, vehicle wear and tear and, ultimately, money.

Besides streamlining delivery processes, IoT can:

increase the visibility of goods and assets
improve customer experience
enhance product traceability, transparency and speed of delivery.

If you are considering investing in IoT, make sure that you factor in the security of your IoT devices so that they maintain data privacy requirements and are protected from cybersecurity vulnerabilities. You may also need to consider how you will integrate the data from different devices and sensors to your internal CRM and other systems.

Robotics

Robots are being put to work across the supply chain, from assembling and inspecting electronics components to picking and heavy lifting in distribution centres.

For example, advanced-technology company Honeywell has found that mobile robots powered by artificial intelligence can dramatically reduce picking times in the warehouse by nearly 50%. And that’s just when they take over the transport tasks of the workflow.

A Deloitte analysis has found that using autonomous robots in the supply chain has the potential to:

ensure long-term cost savings
create stability in labour and utilisation
boost productivity
decrease errors
enable fewer inventory checks
streamline picking, sorting and storing
improve safety by decreasing access to dangerous areas or performing dangerous tasks on behalf of humans.

To reduce risk and maximise your investment, experts recommend performing smaller-scale tests of robotics before doing a complete rollout. It’s also important to deliver an effective change-management process for existing workers to alleviate fears about potential job losses. Currently, robots are doing the more mundane or dangerous tasks so that people don’t have to.

Data science — AI, machine learning and analytics

As we saw above, data science — which includes AI, machine learning and analytics — can strengthen the effectiveness of other supply chain technologies, such as IoT and robotics.

You can use data science for supply chain forecasting to identify any future problems so that you can take action now to prevent them from occurring. You can even use it to enhance your decision-making. The technology can analyse your data and provide actionable recommendations to streamline and optimise your supply chain.

However, before you invest in data science technologies for your supply chain, you need to consider both your data sources and capture methodology and whether you have enough digital supply chain talent and expertise on your team (to actually interpret, communicate and drive action on any data insights).

Supply Chain Management platforms

The lowest risk, lowest initial investment supply chain tech innovation for most companies would be moving from spreadsheets to a supply chain management platform. Octet’s proprietary supply chain management tool makes tracking, validating and authorising every step of your supplier and customer transactions simple, taking the hassle out of managing your supply chain.

Save time by centralising supply chain management – get clear visibility across each stage of a transaction and every purchasing document. No more information scattered randomly across email, messaging and paper notes.
Reduce confusion by eliminating the language barrier – avoid expensive – and potentially relationship-damaging – misunderstandings by easily communicating with your suppliers in their own language using a multilingual supply chain management tool.
Decrease costs by paying suppliers in up to 15 currencies from multiple funding sources with competitive FX rates. Make payments to 68 countries and close your working capital gap by having up to 120 days to repay us, if you pay using our Trade Finance solution.

Real-world supply chain innovation examples

To get a better understanding of the impact of supply chain technology innovation, let’s take a look at two real-world examples.

Officeworks employing autonomous mobile robots (AMRs)

In their Victorian distribution centre, Officeworks has deployed 86 AMRs and 30 sortation robots. Working with fulfillment team members, the robots are helping with picking from more than 25,000 stock-keeping units (SKUs).

By using robots, the distribution centre’s human employees have been able to spend less time walking around since the robots can take the fastest and most direct route. Previously, the human team walked a startling 10–12 kilometres each shift before employing the robots.

This has enabled Officeworks to have better inventory control and an expanded delivery window for its next-day and express delivery services.

Coca-Cola uses AI and machine learning to enhance supply chain efficiency

To enhance its sourcing and procurement processes, Coca-Cola uses a software platform based on AI and machine learning technology.

The platform allows managers to explore “direct and indirect procurement bid information from suppliers and then analyse multiple awarding scenarios based on those criteria and other constraints”. After analysing the relevant data, including supply chain disruptions and vendor information, the platform provides recommendations.

Coca-Cola has found AI and machine learning instrumental in simplifying its procurement process. For example, at previous procurement events, Coca-Cola staff had to manually cleanse and validate bids from over 200 potential suppliers. Now, they have an automated bid cleansing process.

Unlock your supply chain innovation potential

Octet’s intelligent supply chain finance, payment and management solutions can help fund your business growth, giving you the power to further invest in supply chain innovation.

So, if you’re ready to power innovation in your supply chain, get in touch with the team to find out how we can help.

Working Capital Solutions

Trade Finance

Debtor Finance

Supply Chain Accelerate

OctetPay

Industries

Why Octet

Digital wallet

Global network

Cross-border payments

Supply chain management

Security

Rewards

Why supply chain volatility isn’t going away

Building financial resilience through Trade Finance

Proactive finance for proactive supply chain management

Your global supply chain partner

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3. Increased consumer pressures

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Diversification

Analytics

AI and Robotics

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Maximise your supply chain performance with Octet

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