debtor finance Archives | Page 3 of 3

Octet on 2GB & 3AW’s Money News

Posted on October 14, 2020October 14, 2020 by Duncan Khoury

With cash flow never being more important for Aussie SMEs than in the current uncertain economic conditions, it was a fantastic opportunity for our Senior Working Capital Specialist, NSW, Joe Donnachie to speak with Brooke Corte and Scott Haywood on 2GB & 3AW’s Money News program.

Methods that worked well for fast-growing businesses in 2019 may not being doing the trick in the current climate, and Joe covered some top cash flow management tips, including:
– creating a short-term cash runway
– increasing internal and external stakeholder communication
– identifying alternative sales channels; and of course
– accelerating your access to outstanding cash via intelligent working capital solutions!

You can listen to the full podcast here.

Confidential invoice discounting – will it suit your business?

Posted on September 3, 2020May 20, 2024 by Duncan Khoury

The age-old saying ‘cash is king’ has never been more relevant. Cash flow is the most powerful tool for making, breaking or excelling your business. It puts you in a better position to negotiate with suppliers, take advantage of opportunities and weather financial storms. That’s exactly why you might consider invoice discounting – it’s an excellent option for businesses looking to improve their cash flow.

What is invoice discounting?

Invoice discounting is a type of business financing. It’s also known as invoice finance or debtor finance.

It’s a funding solution facilitated through a financier that allows businesses to get up to 85 per cent of invoices paid within 24 hours. The balance is then transferred, minus fees, once the debtor pays.

It may sound complicated, but as soon as you’re set up and approved within your invoice finance facility’s platform, the process is relatively simple.

How invoice discounting works

Your business secures a sale and then invoices your customer.
Next, you send the invoice details to the invoice finance provider, or upload it into their system.
An agreed percentage of the invoice funds are then transferred to you from your finance provider within a short timeframe.
Either your business, or the invoice finance provider’s service, carries out the invoice collection procedure.
The invoice is paid into the finance provider’s bank account.
The balance is transferred to you – less any fees.

There are two ways invoice finance can be set up – confidential or disclosed.

What is confidential invoice discounting?

Confidential invoice discounting is a type of debtor finance where your customers don’t know there is a third party financier involved. You’re under no obligation to tell your debtors that you’re using invoice discounting, and the financier has no right to contact your debtors on your behalf.

It generally attracts higher fees as the risk to the financier is greater. This is basically because the financier can’t put their own debtor management strategies in place as your clients don’t know they’re involved.

How is the payment process different?

Once your facility has been approved and it’s all set up, you simply communicate a change in bank details to your debtors (without telling them the reason for the change). The new bank details are for a bank account held in trust by the financier.

You then upload the invoice into the financier’s system at the same time you send them to your debtors. Within 24 hours up to 85% of the invoice value will be directly transferred to your bank account by the financier. Then, once your debtors pay the invoice into the trust bank account, the financier transfers the balance to you, minus their agreed fees.

This process means you can keep your existing accounts payable procedures in place while accelerating your cash flow. Chasing up late payers remains your responsibility, but that also means you get to maintain control of that vital relationship.

What is disclosed invoice discounting?

With disclosed invoicing, all parties are aware of, and agree to, the financing facility. Your invoices will need to include a communication regarding the third party financier and the financier has the right to contact your debtors to chase payments.

It also allows you to hand off debtor collection procedures to the financier and provides full visibility for all parties involved. Disclosed invoice discounting usually attracts lower fees than its confidential counterpart, as the financier has more control over the debtor management process. However, your business needs to have a strong credit rating in place to be eligible and your customers may prefer not to have a third party involved.

How is the payment process different?

Once you’ve been approved for disclosed invoice discounting, the financier will get in touch with each of your debtors as you upload their invoices into the system. They’ll need to pay the invoices into a bank account held in trust by the financier, as per confidential invoice discounting. However, the debtors will also be aware that it isn’t your business’s bank account.

Just as with confidential invoice discounting, you’ll receive up to 85% of the invoice value within 24 hours of uploading the invoice into the system. Then the financier will liaise with your debtors to collect payment. Once the debtor has paid, the balance of the invoice value will be transferred to your bank account, minus fees.

Which is right for your business?

The best choice for your business will generally depend on two factors:

What’s the business’s current credit rating? If your business has a strong credit rating, you may be eligible for disclosed invoice discounting and the lower fees that come along with it.
Do you want to remain in control of your debtor management? Some businesses prefer to keep debtor management as part of their client relationship, while others are happy to hand it off to a qualified third party.

Regardless of which option you choose, invoice discounting certainly isn’t something to be ashamed of. Some businesses may feel it’s a bit taboo, but that couldn’t be further from the truth. Far from signalling that your business is in financial strife, engaging a financier to access your receivables means you’re being smart about your cash flow. Accessing one of your biggest business assets, faster, simply means you’re more likely to be able to grow – which is better for you, your suppliers and your debtors.

Want to know more?

Here at Octet, we offer flexible invoice discounting. If you’re considering it as a funding option, simply get in touch with us. We’re happy to discuss the process and help you determine which type of invoice discounting solution might best suit your business’ unique requirements.

Get in touch today.

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.

VIC manufacturing company – stacking up the wins

Posted on April 14, 2020May 20, 2024 by Duncan Khoury

The Scenario

This family-owned company began in 2003, and now manufacture timber and plastic pallets, along with plastic and produce bins, for export and domestic customers. The business group consists of both the manufacturing facilities and a sawmill to ensure their supplies.

Although the company had finance in place with a local bank, they wanted more flexibility. Their ideal solution involved splitting their funding across their existing bank facility and more innovative supply chain funding.

The Solution

The company’s financial adviser approached Octet to discuss a solution that would support the business group’s growth objectives.

Octet approved a combination of working capital facilities to suit the client’s needs, implementing a $3 million Debtor Finance facility, as well as an initial $300,000 Trade Finance facility. This decision was based on the business’ solid profits over the past three years and strong forecast revenues. Octet will review the Trade Finance limit once the company’s final FY19 financials are available.

This combination of supply chain funding lines is an excellent example of how a business can increase their working capital to pursue growth opportunities for a bright future.

Could your business benefit from a more innovative supply chain finance solution like this manufacturing business?

Talk to us today

QLD mining company – providing the raw materials for growth

Posted on April 14, 2020May 20, 2024 by Duncan Khoury

The Scenario

Established in 2007, this family-owned raw materials business specialises in providing various graded aggregates and gravels to mines and councils. They also have sand mining rights, and a concrete batch plant that supplies concrete to a variety of clients.

The business had an existing finance facility with another financier, but wanted both better terms and to increase their working capital funding for anticipated future growth.

The Solution

The company’s financial broker approached Octet to ask about a solution that would meet their needs.

Octet approved a combination of a $7 million Debtor Finance facility and a $75,000 Trade Finance solution for the client, basing the approval on the business being well-established with a reasonably strong net worth. Additionally, it had enjoyed significant, stable growth over the past three years.

The client currently expects strong growth in the coming 12 months, due to acquiring an additional quarry. Octet’s combination of supply chain funding lines will give them the working capital they need to power their growing business.

Looking for finance options for your mining business?

Talk to us today

How does supply chain finance work?

Posted on March 31, 2020May 20, 2024 by Duncan Khoury

A strong cash flow is one of the most important factors in making your company successful, but that can create a serious challenge in some trade relationships.

Traditional finance methods for managing cash flow are often too expensive or inflexible for many businesses. Supply chain finance is an alternative finance method that provides short-term funding to improve your working capital.

This financing method protects the supply chains of medium-to-large Australian business by introducing a third party into the buyer-supplier relationship.

Let’s look in-depth at how supply chain finance works.

What is supply chain finance?

It’s an unfortunate reality of business that each party in a trade relationship often has conflicting goals. They’re each concerned with their own business’s cash flow however, which means the supplier wants their money quickly, while the buyer generally wants to postpone payment for as long as possible.

Introduce a complex supply chain like manufacturing or retail into the mix, where suppliers are also buyers, and the potential problems multiply.

Supply chain finance is a smart financing option that offers buyers and suppliers an opportunity to work together to stabilise both parties cash flows. It introduces a financial intermediary – a third party – into the buyer-supplier relationship.

Think of supply chain finance as an innovative hybrid of trade finance and debtor finance. The third-party financier almost immediately advances the money that the buyer owes to the supplier, ensuring that the supplier receives payment as soon as possible. They later recover that money from the buyer, allowing the business to benefit from longer payment terms.

As a result, the financier effectively stabilises the entire supply chain.

But how exactly does supply chain finance work?

How the supply chain finance process works

The supply chain finance process is simple. It starts when the buyer enters into a supply chain finance agreement with a third-party financier. After this:

The supplier invoices the buyer as normal
The buyer approves the invoice as correct
The supply chain financier pays the supplier soon after it’s approved
The buyer then pays the financier up to 120 days later, as agreed by both parties

This means that the supplier doesn’t have to wait for the full payment term before they get their money. And that, in turn, means they can pay their own suppliers on time.

In short, the whole supply chain runs without cash flow bottlenecks.

Supply chain finance: what’s in it for you?

Supply chain relationships are often uneven in terms of the power each party has in the transaction.

For example, larger buyers (such as big supermarket chains) can put smaller suppliers at risk of cash flow shortages by dictating longer payment terms. Meanwhile, small buyers may struggle with liquidity, and risk letting unpaid invoices fall overdue, which can then impact the entire supply chain – small, medium and large businesses alike.

Complex supply chains and global trading relationships can exacerbate the problems. Time delays with cross-border transactions or late payments can have a domino effect across the whole supply chain.

Supply chain finance can strengthen the entire chain for both buyers and suppliers.

How does supply chain finance help buyers?

Generally, the buyer is responsible for establishing supply chain finance. So why would they want to do that?

As a buyer, paying upfront for high-value goods or services can be a big hit to your cash flow. Using supply chain finance helps you to:

save money by taking advantage of any early payment discounts
still trade as usual with the cash you have available
maintain a better relationship with your supplier, which strengthens the stability of your supply chain.

Additionally, a supply chain finance facility is also generally considered an ‘off-balance sheet’ source of funding, which means it doesn’t generally affect your ability to access other traditional funding sources, such as bank loans.

How does supply chain finance help suppliers?

As a supplier, using a supply chain finance facility means you:

get paid earlier
improve your balance sheet by lowering your accounts receivables
can piggyback on a larger buyer’s credit rating, taking advantage of the favourable terms they’ve negotiated.

Put simply, supply chain finance has advantages for both suppliers and buyers, and reduces risk along the whole chain.

Octet’s Supply Chain Accelerate: a revolutionary working capital solution

We’ve designed our Supply Chain Accelerate solution to provide buyers with supply chain financing that they can then use with specific sellers.

Is Supply Chain Accelerate right for you?

Ideal buyer businesses are highly profitable with a larger turnover. To show this, you’ll need to provide a copy of your recent, audited financials, which we’ll check against our internal credit rating.

If you’re approved, here are just a few ways Supply Chain Accelerate can give your business a boost.

Quick setup

We have a fast setup process for both buyers and sellers. From the initial assessment to underwriting and on-boarding to go live, it typically only takes a few weeks.

Unsecured funding

Unlike more traditional financing, Supply Chain Accelerate is completely unsecured. That means we don’t require director or company guarantees. Instead, you secure all finance against your business performance.

Flexible finance

Supply Chain Accelerate doesn’t have to be your only finance source. Use it to supplement other existing or planned funding facilities. If you need extra finance to top-up on an existing loan, you can do that. And since we take on the liability to your supplier, it doesn’t sit on your balance sheet, so it won’t interfere with applying for other finance.

Global security

We vet both you and your suppliers against global banking standards. We also carry out all transactions securely, keeping your data safe and using anti-fraud technology. This level of security gives you extra peace-of-mind in your supply chain.

Increased visibility

Our secure platform enables you to track each critical step in the supply chain process – from procurement to payment, and from order to cash. The platform also stores and validates all essential documents at each stage, giving both buyer and supplier full transactional visibility.

Cost splitting

You can choose to pay the Supply Chain Accelerate cost yourself, have the other party pay it, or split it between both businesses.

How Octet’s Supply Chain Accelerate can grow your business

Supply Chain Accelerate recently helped a domestic fashion clothes supplier that had an outstanding ledger of $5 million. The company had one main buyer and a good credit rating, but cash flow bottlenecks were stopping them from growing their business.

A competitor had offered this client debtor finance of up to $2.5 million with an 80% advance rate. However, since the company was a good credit risk, Octet offered them the full $5 million finance at 100%.

We on-boarded their main buyer, and as soon as they were authorised, we funded the business 100% of the claimed amount, minus our transaction fee. The buyer then had 90 days to repay us, effectively giving them an extension of credit.

And since our funding was more than double the amount of our competitor’s, our client had the cash flow to effectively double their revenue within the next 12 months. As a result, their net profit after establishing the supply chain finance facility significantly increased.

Negotiate smarter

Supply chain finance can help you to improve your cash flow, strengthen your supply chain and power your business growth. But we also have a range of other finance solutions that may suit your needs.

Discover more about Supply Chain Accelerate or talk to us today to see which solution will work best for you.

The comments and views in this communication are those of the author as at the date of this post and are subject to change without notice. This communication should not be construed as advice and you should act using your own information and judgment. Whilst 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.

Invoice factoring vs invoice discounting: what’s best for quick cash flow?

Posted on March 31, 2020May 20, 2024 by Duncan Khoury

Alternative forms of business finance like quick invoice factoring and invoice discounting are growing in popularity. In fact, the 3rd Asia Pacific Alternative Finance Industry Report found that ‘invoice funding’ was the third-largest type of alternative funding in Australia.

There are two main types of invoice funding: invoice factoring and invoice discounting. Both give you quick access to funding to improve your cash flow, but the main difference lies in who collects the invoice payments.

Let’s take an in-depth look at both invoice factoring and invoice discounting, so you can see which is right for your business.

What is invoice factoring?

Strong cash flow is essential for running a successful business. Having sufficient cash available:

lets you maintain good relationships with your suppliers, since you have the funds to pay them more quickly
saves you money by letting you access any early supplier payment discounts
lets you take advantage of opportunities for growth.

Invoice factoring helps you improve your cash flow. It’s a type of debtor finance that uses your accounts receivables to free up working capital. It means you get access to the money you’re owed from your customers quickly, without having to wait for them to pay.

With invoice factoring, you sell your accounts receivable to a financier. In exchange, they give you up to 85% of the value of the invoices upfront – quickly and easily.

From there, the financier becomes responsible for collecting the debt. It’s up to them to collect payments from your clients and process them.

Once they’ve collected payment, they pass the rest of the money onto you, minus a small fee.

That means invoice factoring can help eliminate any cash flow blockages.

What is invoice discounting?

Invoice discounting (also known as receivables discounting) is similar to invoice factoring, with one key difference. With invoice discounting, the financier doesn’t take on the responsibility of collecting the debt. Instead, that stays with you.

So which option is better for you as a business? Let’s compare the two.

Invoice factoring vs invoice discounting

Here are some points to consider when you’re comparing factoring vs discounting your receivables.

Invoice factoring

Quicker and possibly more cost-effective: since you pass the responsibility of collecting payment over to the financier, invoice factoring is quick and saves your company time and perhaps wages. On the other hand, you forfeit some control over your day-to-day operations.
More expensive: invoice factoring companies generally help with sales ledger management such as allocating payments, sending statements and reminder letters. The associated fees are often higher than with discounting, since the financier does more work.
More obvious: your customer knows you’re using a financing facility, since they need to deal with your financier. Knowing this may make some clients wary of doing further business with you.

Invoice discounting

You retain more control: with invoice discounting, you manage your sales ledger, which means you keep control of a significant aspect of your business.
Smoother cash flow: rather than operating on an invoice-by-invoice basis, invoice discounting usually works with your ledger balance as a whole. This lets you smooth out any cash flow ‘ups and downs’ you may have over the period.
More discreet: invoice discounting also lets you keep your funding confidential from your clients. They won’t know that you’re using a short-term financier.

Whichever method you choose, both invoice factoring and invoice discounting let you tap into your accounts receivables to keep your cash flow smooth and your business growing.

Octet’s Debtor Finance: grow smarter

Octet’s Debtor Finance facility lets you convert up to 85% of your unpaid invoices to cash within 24 hours.

But is it the right funding choice for you? It might be a good fit if your company:

offers longer payment terms to buyers
is seasonal
contracts to large corporations who can set their own (longer-than-average) payment terms.

Debtor finance gives you the cash flow to pay suppliers, buy equipment or expand your business. Because it’s based on your ledger balance, the amount of finance you have available generally grows as your business does.

Unlike many other types of finance, you don’t need to provide security like property. So if you’re a business owner who doesn’t have personal property, or your assets don’t have enough available equity, debtor finance may be your best option.

It’s flexible enough that you can use it as your primary source of funding, or only for top-up funds. And because it doesn’t appear on your balance sheet, it doesn’t interfere with existing or future loans.

Octet’s Debtor Finance is available to businesses that range from newer companies to those that are well-established. Ideally, we like to see a turnover of at least AUD 1 million, with 1-2 years of business experience (but don’t hesitate to talk to us anyway if you’re turning over $500,000 or more, as we may be able to help).

Power your growing business with Octet’s finance options

Invoice factoring and discounting are just two ways you can give your business a boost via alternative finance. The right method for you will depend on factors like how big your business is, what your assets are and the amount you need to inject.

At Octet, we can finance all kinds of business. Talk to us today to discover how we can power your business growth.

VIC transport and logistics company – driving to success

Posted on March 31, 2020May 20, 2024 by Duncan Khoury

The Scenario

Established in 1991, this group of companies provides integrated supply chain solutions in metropolitan areas across Australia and New Zealand. They specialise in customised, on-demand transport and logistics services across a wide range of industries, including industrial, consumer and health.

The group already had financing with a major bank; however sought an alternative funding source that would allow them to repay their bank finance and free up working capital.

The Solution

The company’s financial adviser approached Octet for a solution that would provide the additional working capital the group needed, allowing for greater flexibility to capitalise on productivity improvements and growth opportunities.

Whilst numerous factors, including unsupportive banking relationships, had led to a recent profit downturn for group, Octet was confident that the new management team’s robust plan would turn the business around in the near future. Octet therefore supplied a Debtor Finance solution of $8 million to nine entities within the group, allowing several entities to share a single, flexible finance facility.

The Debtor Finance facility will support the company to fund various projects to return it to financial health, enabling them to manage cash flows with maximum efficiency.

Could your transportation industry business benefit from stronger cash flow?

Talk to us today

How does debt factoring improve cash flow?

Posted on March 1, 2020May 20, 2024 by Duncan Khoury

No matter the size or type of your company, managing cash flow is essential, and often difficult. Many businesses need help in the form of financing to smooth out their cash flow cycles.

Debt factoring is an increasingly popular form of funding for Australian businesses. It basically involves ‘selling’ your accounts receivables in exchange for fast access to cash.

But how does debt factoring work? And how can it improve your cash flow? Read on to find out more.

How does debt factoring work?

Debt factoring is a way to fund your business by using the largest asset your business has – your accounts receivable.

It works by ‘selling’ your outstanding customer invoices (accounts receivable) to a debt factoring company. The company, known as a financier, ‘buys’ those invoices for up to 85% of their value which you can then use immediately in your business, rather than waiting for your customer to pay. Your financier then collects the full invoice payment from your client and pays you the outstanding amount, minus whatever they charge as their fee.

Why debt factoring is so powerful

It’s not hard to see how debt factoring can help your business with cash flow.

After all, imagine if your customers paid you within 24 hours of receiving their invoices.

Think about what you could do with your business:

Where could you take it?
How many more opportunities for growth could you take advantage of?
What financial benefits could you take advantage of by paying your suppliers faster?

Having your funds in your bank account within a day gives you essential working capital. You can use it to pay expenses – or as base capital to fund business expansion. Imagine the possibilities!

Of course, in the real world, your customers just aren’t going to pay you within 24 hours. They’re all managing their own cash flow, so it’s almost never in their best interests to pay your invoices early. But that net effect – up to 85% of your invoices paid up front – is essentially what debt factoring provides.

In essence, debt factoring opens up more finance, more quickly, than you can achieve by any other business funding means.

How does debt factoring improve cash flow?

Debt factoring improves cash flow by giving your business significantly faster access to revenue owed to you.

It means you never have to wait the full term of your invoice to get your cash. And that’s important, because waiting 30, 60 or 90 days to be paid can put a severe strain on your business. In fact, of the 8,000+ companies that declared insolvency in 2018/19, more than half – 51% – reported inadequate cash flow as the reason.

That’s not surprising, given the average time taken to pay invoices by Australian businesses is 33 days. Sadly, the average time it takes big businesses to pay small businesses is even worse. So consider how powerful it would be to get your money almost immediately via debt factoring. Then it’s there and available for you to:

pay your bills and business expenses (e.g. wages, rentals, tax and insurances)
buy supplies or equipment
grow your business… without that extended wait.

Without instant access to the money locked up in your accounts receivable, however, you need to fund all of the above from your profits or working capital. That means that – unless your cash flow is particularly strong from other sources – your business can’t grow. You can’t take on new work and opportunities if you don’t have the cash flow to support them.

It’s also important to realise that cash flow isn’t something you can sort out once and never think about again. Running a successful business means maintaining a strong, steady cash flow over time. Luckily, debt factoring isn’t just a one-off loan. It gives you ongoing access to cash flow, like a line of credit. As you raise more invoices, you have access to more cash.

Let’s say you made $500,000 worth of sales in January. Debt factoring would give you up to $425,000 of that almost immediately. If you then took on new contracts, won new customers and increased your sales to $600,000 in February, your available amount would rise to up to $510,000, depending upon the agreed facility size.

This more immediate cash flow benefit can help to accelerate your business growth, which in turn could lead to more available cash flow.

Other advantages of debt factoring

Improved cash flow isn’t the only advantage of debt factoring. It also provides:

A flexible alternative to traditional financing. Traditional funding methods like loans and overdrafts generally require some form of security – usually property or other assets. That may not always be an option, especially if you don’t own property or have little equity to leverage. Alternative finance options like debt factoring don’t require directors’ personal assets as security. Your business simply funds itself and grows in line with its receivables.
Freedom from stress. Don’t underestimate the positive impact on your mental health of no longer having to stress about cash flow. An MYOB survey found an unacceptable 52% of business owners have experienced increased stress and anxiety due to late payments and the cash flow issues they cause. Debt factoring can allow you to focus on planning your business, rather than fighting cash flow fires.

How much does factoring your accounts receivable cost?

You may be thinking that all this ‘factoring your accounts receivable’ sounds great… but how much will it cost?

There’s a perception that it’s expensive, but the reality is that the cost is on par with bank finance (without the personal security constraints) – and far less than any credit cards you use to smooth out your cash flow.

The actual fees vary, depending on several factors like:

your sales volume
the industry you’re in
how stable your business is
what payment terms you use
how creditworthy your customers are

We can help you to understand the fees if you’d like to discuss your options.

How can Octet help my business’s cash flow?

At Octet, we have a range of flexible financing solutions to suit different businesses, including Debtor Finance, Trade Finance and Supply Chain Accelerate.

All of these financing solutions can be used as your primary funding source or to supplement other funding sources like bank loans. And since they aren’t generally classed as ‘debt’ from an accounting standpoint, they don’t affect your ability to access more traditional funding methods.

Our most flexible option for businesses that are growing fast is Debtor Finance.

Is our Debtor Finance facility right for you?

Do you have a growing business, with great ambition and potential? Have you been trading for at least 6 months to 1 year, with a minimum AUD 1 million turnover? (That said, we can also look at start-ups, depending on your history). If so, you might be eligible for Debtor Finance.

Like many growing businesses, you may be facing cash flow challenges or looking to recapitalise so you can free up your cash flow. You may want to inject that cash into your business to make more sales, and – in turn – generate more profits. Does that sound like you?

Then, Octet’s Debtor Finance facility could be your answer. It gives you access to funding that increases as your business grows, so you can accelerate your growth and take advantage of new opportunities.

We’ve seen clients grow over just a few years from having a $100,000 Debtor Finance facility to $4 million, powered by the more flexible cash flow our Debtor Finance solution gives them.

Unlock the power of your receivables and improve your cash flow

Find out more about Debtor Finance today.

VIC civil construction company – smoothing out the seasonal cash flow cycle

Posted on March 1, 2020May 20, 2024 by Duncan Khoury

The Scenario

Established in 1975, this family-owned company provides a full range of civil construction skills, and carries out projects throughout Victoria. They originally had a receivables facility in place with another finance group, but were looking for an alternative provider. They were seeking a more holistic funding solution with greater funding at better rates to help them better manage their cash flow cycle.

The Solution

The company’s financial adviser approached Octet to ask about solutions that would meet their client’s needs. Because the company was mature and had growth potential, Octet could offer a mix of business capital solutions that covered the required funding.

Among the solution mix was an invoice discounting Debtor Finance facility of up to $1.4m, which covered invoices that the company’s previous provider couldn’t. The business initially used this to pay off their significant ATO arrears.

The company’s invoices included a mix of ‘do and charge’ and progress invoicing. Going forward, the business will fund their debtor’s ledger and new invoices using Octet’s Debtor Finance for ‘do and charge’ invoices, and using Supply Chain Accelerate for the progress invoicing. Finally, they will access a more robust, consistent business credit line using Octet’s Trade Finance facility.

The business is now in a prime position to seek improved trading terms with suppliers, better cope with seasonal revenue fluctuations, and fund existing and future growth opportunities.

Could your business benefit from a funding mix like this?

Talk to us today

VIC Urban Technology company – lighting their future

Posted on March 1, 2020May 20, 2024 by Duncan Khoury

The Scenario

Established in 2004, this specialist group of companies provides cost-effective solutions to the traffic industry. They deliver these solutions to a range of customers, including road authorities, local councils and energy companies, both throughout Australia and a growing number of overseas countries. In 2019, the group took out a loan with an investment holding entity to repay facilities and restructure debt with their main banker.

The business sought working capital to help them settle the investment holding entity’s loan.

The Solution

The company’s financial adviser approached Octet to ask about a solution that would provide the additional working capital the group needed to pay out their loan.

Octet created a solution involving both Trade Finance and Debtor Finance to suit the business’s unique requirements. The group had sufficient assets business-wide to support a competitive $550k Trade Finance facility, which enabled them to refinance their loan. Going forward, the facility will help them to buy from overseas suppliers and improve their gross margins. Octet’s Debtor Finance facility virtually replaced more expensive offshore funding that had regressive covenants. The $5.55M funding has been capped by the offshore funder, but this is likely to change around Oct 2020 with an increase in Octet’s facilities, should the offshore funder consent.

The business is now well positioned to seek better prices from their suppliers, and fund future growth with new, diversified offerings.

Could your business benefit from a trade finance facility?

Talk to us today

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

What is invoice discounting?

How invoice discounting works

What is confidential invoice discounting?

How is the payment process different?

What is disclosed invoice discounting?

How is the payment process different?

Which is right for your business?

Want to know more?

The Scenario

The Solution

Could your business benefit from a more innovative supply chain finance solution like this manufacturing business?

The Scenario

The Solution

Looking for finance options for your mining business?

What is supply chain finance?

How the supply chain finance process works

Supply chain finance: what’s in it for you?

How does supply chain finance help buyers?

How does supply chain finance help suppliers?

Octet’s Supply Chain Accelerate: a revolutionary working capital solution

Is Supply Chain Accelerate right for you?

Quick setup

Unsecured funding

Flexible finance

Global security

Increased visibility

Cost splitting

How Octet’s Supply Chain Accelerate can grow your business

Negotiate smarter

What is invoice factoring?

What is invoice discounting?

Invoice factoring vs invoice discounting

Octet’s Debtor Finance: grow smarter

Power your growing business with Octet’s finance options

The Scenario

The Solution

Could your transportation industry business benefit from stronger cash flow?

How does debt factoring work?

Why debt factoring is so powerful

How does debt factoring improve cash flow?

Other advantages of debt factoring

How much does factoring your accounts receivable cost?

How can Octet help my business’s cash flow?

Is our Debtor Finance facility right for you?

Unlock the power of your receivables and improve your cash flow

The Scenario

The Solution

Could your business benefit from a funding mix like this?

The Scenario

The Solution

Could your business benefit from a trade finance facility?