Commercial power generation, manufacturing and wholesale business producing generators and associated power units. This engineering business has a specific production capability in the area of power units.
Although this client operates nationally, it was unable to secure a bank credit facility. The business had an older-style debtor finance facility that no longer suited its needs and did not generate enough cash flow. The client was also unable to adequately communicate its requirements to the current lenders, so the relationship had deteriorated.
In small business, lack of communication is a major reason for directors to change lenders. At AIF, we work very hard to communicate effectively with clients to support and maintain cashflow to their businesses. This communication extends from the initial sales process and, importantly, continues throughout the funding term of the facility. This client has also had some slow-paying debtors and required effective and confidential advice to improve debtor management.
The referral partner was a business transformation manager (also known as a turnaround manager). They identified a number of issues within the business, including the opportunity for funding against the outstanding invoices or debtors on more favourable terms with AIF. These new agreed terms would increase the cashflow of the business by four times. The directors now have the opportunity to expand the business and trade without funding restrictions.
So, from successfully funding the debtors and talking to one of our team of cashflow specialists, the business transformation manager identified a need to fund the stock importation of the client with a trade finance facility. AIF approached the referral partner and a trade financier to arrange this trade finance to compliment the debtor facility provided by us.
When selling B2B, it is standard practice to offer 30 days EOM (end of month) terms to your customer. The unfortunate reality for suppliers is that you are actually paid somewhere between 30 days and 75 days, depending on the debtor’s cash flow. This makes cashflow management and trading very difficult and stressful.
Invoice finance, also called factoring or debtor finance, improves business cashflow, removes financial stress and allows business growth. It is the key to funding accounts receivable or debtor accounts for many small business owners.
Another Done Deal:
This engineering business now has a line of credit to support the expected 100% increase in turnover in the next 12 months.
It very exciting for AIF to provide funding to a business owner who is so entrepreneurial and forward thinking.
This is just another Done Deal and another example of how Australian Invoice Finance is doing business with small business.
Learn more about debtor finance:
Find out more about how AIF can help your business take control of cash flow through a factoring facility.