Securing the right financial support from major banks is a common challenge for many businesses, especially those in industries requiring agility and tailored solutions. Traditional lenders often don’t address the specific needs and pressure points of these more complex business groups. Rising fees, rigid loan terms, and a lack of flexibility can stifle growth and operational efficiency, leaving businesses in desperate need of a more tailored approach to financing. This was the situation faced by this business consortium that operates across multiple industries, until they found a comprehensive working capital finance solution with Octet.
Struggling with financial constraints due to complexities of the business
In 2022, the directors of an interconnected group of companies, working across multiple industries, faced a daunting challenge. As new majority owners, they inherited several businesses struggling with cash flow issues and strained lender relationships. The relationship with their primary bank lender had soured, and rising fees from non-bank lenders compounded their financial woes. Two of their businesses, operating in the meat industry, demanded quick, reliable funding solutions, but their existing financial arrangements were not meeting their unique requirements.
The primary goal of the consortium was to gain more buying power and growth opportunities. They needed a financier who understood their business’ pressure points and could provide a comprehensive, tailored financing solution. Their business operations, particularly in meat wholesale, required a flexible approach due to the perishable nature of the products, which typically operate on shorter financing terms. Through their commercial finance broker, the directors sought a lender who could consolidate their multiple financing needs into a single, cohesive package.
Octet’s innovative supply chain finance: A flexible cash flow strategy
Enter Octet, with a bespoke working solution that addressed all of the business needs across the consortium. Initially working on a financing arrangement for one of the consortium’s operations, Octet was able to extend this to provide a comprehensive financing package that included a $4.25m debtor finance limit, $2m trade finance limit, and a $600k asset finance facility. This all-encompassing approach was designed to alleviate the pressures faced by the group.
Octet’s solution enabled one of the business directors to release the mortgage held over their home and terminate their trade facility with the bank. Additionally, by bundling all their financing needs into one package with Octet, the business was able to pay out, or reduce, the other remaining facilities with multiple non-bank lenders.
One of the most significant aspects of Octet’s solution was its tailored approach to the meat wholesale sector. Despite the industry’s challenging financing conditions due to the fast turnover of the products, Octet crafted a financing plan that provided the business with much-needed speed to market. This agility allowed the directors to secure supplier discounts by ensuring quicker and more regular payments, setting them apart from competitors.
Immediate and long-term benefits for the business
The impact of Octet’s financing solution was immediate and transformative. Within the first 24 hours of finalising the facility, the company was able to disburse $1.4 million in trade payments to their major suppliers. This rapid injection of working capital not only stabilised their operations but also enhanced their purchasing power.
The benefits extended beyond immediate financial relief. The new financing structure allowed the business to focus on strategic business planning and growth, rather than constantly managing cash flow issues. The agility provided by Octet’s tailored solution enabled the business to purchase more stock across different operations, breaking free from the constraints of their previous non-aligned terms.
With Octet’s comprehensive support, the company gained the financial flexibility and stability needed to thrive in the competitive meat industry. The partnership with Octet not only resolved their immediate challenges but also positioned the group of interconnected companies for sustainable growth and success, demonstrating how a well-structured and flexible financial partnership can turn around business fortunes and set a course for future prosperity.
Grow your business with Octet
Via our Referral Partner Program Octet empowers businesses across a range of industries, including food and beverage, manufacturing and transport, offering innovative Debtor Finance and Trade Finance working capital solutions.
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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.
