One Big Happy Family as Invoice Financing Deal Drives Tool Sales

A tool manufacturing business built on three generations of family dedication has hit new heights through strong hardware store sales and backed by a reliable source of funding.

A proud family business has built a reputation over more than 50 years as a trusted toolmaking manufacturer. With such a long history, it’s notable that in the past three years revenue has doubled. The “X” factor? Steady cashflow that comes from using a confidential funding arrangement with ScotPac.

Trading off hard-won status as a supplier of quality do-it-yourself and trade products, the enterprise signed a deal in 2017 to sell through Bunnings hardware stores. The move has seen the business, which has succeeded during three generations of family ownership, record its best results.

“We’ve doubled our business,” says family spokeswoman Carly*.

 

Strong sales and cash flow

While Bunnings sales have been a crucial driver of recent growth, including during the COVID-19 crisis when DIY projects soared, a second factor cannot be underestimated.

In 2018, the toolmaker discovered a reliable form of non-bank funding through a partnership with ScotPac that has unlocked opportunities, freed up cashflow and let the business shift away from bank loans that tied up family members’ personal property assets as security.

ScotPac’s confidential Invoice Financing facility acts as an on-demand and flexible line of credit secured by one or more outstanding sales invoices. This smart choice to leverage the value of the business’s strong receivables’ ledger has been a game-changer, converting invoices into a fast source of cashflow.

While the business had tried one other non-bank financing solution, Carly says it came with penalties for faster invoice payments. “We compared that with the ScotPac offer and it was just a no-brainer.”

The business felt that its long history and attention to accounting detail meant that it would be a good client for ScotPac, too. “We manage our debtors well and I’m sure ScotPac could see that we’re a well-organised business, so we represent a low risk to them.”

A constant flow of invoices through Bunnings and its parent company, Wesfarmers, also gave ScotPac the confidence to back its operations.

 

Right products at the right price

The business was set up in the late 1960s and a rebranding initiative about two decades ago first paved the way for a more focused and profitable enterprise.

It now supplies a range of reliable and affordable tools for both DIY enthusiasts and professional tradies, packaged and labelled to make it easier for customers to select the appropriate product for a job.

The family’s management team has always targeted continuous improvement, which is why it was open to adopting a new form of funding through ScotPac. “It’s been great for growth because as soon as you make a sale you can tap into the funds,” Carly says.

Adding to the mix has been a smooth onboarding and ongoing education process with ScotPac personnel providing on-site training and support as required. “They show you how the system works, and we’ve always had one relationship manager who knows our account and can sort things out if an issue pops up.”

 

All systems go

At the heart of the partnership with ScotPac has been clarity and regular communication about systems, processes and costs.

“When you’re dealing with a bank it’s usually very slow and cumbersome and there are lots of layers of bureaucracy,” Carly says. “We’ve found dealing with ScotPac much easier.”

Flexibility of funding has made a real difference. For example, as tool sales rose quickly on the back of a surge of DIY projects during COVID-19, the business knew it could negotiate increases to its facility limit with ScotPac, which has more than 30 years of experience lending exclusively to SMEs.

“It’s really good working with a partner who understands our business,” she says. “If and when we put more products into Bunnings or other retailers, we can go to ScotPac and tell them that we’re going to need more funding.”

That has been in contrast to former funding arrangements with major banks. “We had two bad experiences with big banks and it’s so refreshing to deal with a non-bank. With ScotPac, they understand their clients and can tailor a solution that meets our needs.”

Maximising business value

With the Bunnings alliance bedded down and funding secured through ScotPac, the toolmaker is confident that it can build on five decades of success and keep expanding.

“I just really see the business going onwards and upwards,” Carly says. “We just want to keep growing and becoming more efficient. Having strong cashflow because of ScotPac means we can have the products on the shelf ready to go.”

*This client story profiles a business that uses a confidential funding facility with ScotPac, so names have been changed for confidentiality.

Distiller powers national growth using Invoice Finance

Funding on tap will drive Tasmanian spirits producer’s national and overseas expansion.

Distillers closely guard their recipes, but one spirits producer is happy to let the industry in on something he believes shouldn’t be a secret – the recipe for successfully funding a growing liquor business.

Strait Brands founder Philip Ridyard believes many producers have no idea about the funding that has allowed his premium Tasmanian gin and vodka business to take on national and overseas distribution.

“Strait Brands has been backed by Invoice Finance since 2016 and we’ve found it’s a financial solution that enables us to pursue our growth strategy without being crippled by excise duty commitments,” Mr Ridyard says.

“When Scottish Pacific came on board at the end of 2016, the positive impact was immediate. Without them we would have to use over half our sales revenue just to pay the monthly excise duty, which would make it impossible to manage cash flow effectively,” he says.

Scottish Pacific is Australasia’s largest specialist working capital funder, with a 30-year history of providing invoice finance to SMEs from a range of industries including larger brewers, micro-breweries and distillers.

Funding to cope with excise duty commitments
There’s been a recent growth in the number of Australian whisky and gin producers, with gin, in particular, enjoying a renaissance as a bartenders’ favourite, with its range of flavours, infusions and botanicals.

This popularity, combined with Strait Brands’ new production and packaging facility, high volume capability and new national distribution arrangements, puts them in the box seat to expand at home and abroad.

It also creates growing pains when considering excise duty which must be paid weekly, based on turnover.

“The excise issue is why many manufacturers in the drinks industry can’t distribute nationally, even if they had the ability to manufacture in higher volume. And I’d say many distillers probably aren’t aware of what a business-changing solution invoice finance could be for them,” Mr Ridyard says.

“We could not even contemplate undertaking national distribution without invoice finance, unless an investor walked in and gave us $5 million.”

Strait Brands’ growth plans
Strait Brands was Australia’s first premium vodka and gin producer, with its first production in 2006. They now offer a range of five gins and five vodkas, bottling at the source of its super-soft spring water in northern Tasmania’s and using an abundance of locally grown fruit and nuts.

Like most business journeys, it has not been just an upwards trajectory – Philip Ridyard says. “It’s been a bit of a roller coaster ride, but we have never wavered from our original core strategy”.

Early expansion plans were initially successful, including forays into China and Vietnam at the time of the Beijing Olympics, but the Global Financial Crisis impacted its distributors.

Now, as 2020 approaches, the time is right to expand, Strait Brands has done the hard yards in terms of locking in fruit, nuts, and bottle procurement and local and international distribution channels.

Strait Brands is close to completing construction of a new $500,000 production and packaging facility at York Town, 50km north of Launceston. The facility, on the same property as its crucial source of natural spring water, will be able to package 1.25 million bottles of vodka and gin in 2020, delivering the capabilities to target national distribution and exports.

It remains one of only a handful of Tasmanian spirits producers with a multi-head bottling line at their own facilities (most others bottle by hand).

The new facility will have a tasting room and a training facility to allow bartenders from around the country to learn about Strait Brands’ products.

Next year phase two of the production facility’s expansion plans will begin construction, a $3 million project increasing production to 3800 bottles an hour, to fulfil orders as Strait exports into the US, UK and South East Asia.

With a best yet projected current financial year turnover of $6.4m, Strait Brands is working towards turnover of $17m+ in 2021, increasing to $32m by EOFY 2022.

How Invoice Finance works
The main issue that affects the cash flow of a spirits business is excise duty per bottle of spirits. Currently, a 700ml bottle of vodka with 40% alcohol incurs $24.04 in excise duty and rises by CPI in February and August.

Next year, as the business begins national distribution through a major wholesaler and a distributor group, it will have to make weekly excise payments.

“Invoice finance is important to our business now, but once we begin national distribution it will be critical for us. We will be paying millions of dollars a week in excise duty,” Mr Ridyard says.

“Years before we started using invoice finance, it got to the point where we couldn’t put more stock into Sydney because we couldn’t afford the effect on cash flow of excise duty.

He said within the business there is some regret that they didn’t use invoice finance sooner, as it would have allowed Strait Brands to grow substantially – and sustainably – much earlier.

Invoice Finance, also known as debtor finance or invoice factoring, has been used by thousands of Australian businesses for more than three decades. It is basically a line of credit linked to and secured by outstanding accounts receivable.

It can be used by any business that supplies products or services to other businesses on standard trade credit terms. It may involve confidential invoice discounting (for larger, more sophisticated businesses with a dedicated finance department) or full management of accounts receivables (which allows smaller enterprises to focus on growing their businesses rather than chasing outstanding invoices).

Invoice Finance and cash flow for distillers
Mr Ridyard said a significant outlay on Strait Brands’ new proprietary bottle could also cause extra strain on their working capital, so having invoice finance in place to smooth out cash flow bumps offers extra peace of mind.

“It can be a long time from paying for the large bottle order to being able to invoice our customers – and a further wait to get paid. In the meantime, we have expenses we’re accountable for.

“For us, the real advantage of invoice finance is that Strait Brands can offer preferential terms to customers, which means they get a good wholesale price so they can offer their own customers a premium Australian product.

“We can give them 30-day terms or more, knowing that once the invoice is issued and delivery confirmed, I can access 80% of its value from Scottish Pacific, so I’m only waiting 30 or so days for the remaining 20% (minus fees).

He said in 2020, as Strait Brands starts targeting individual bars, restaurants and hotels around Australia, customers will deal directly with Strait Brands.

“Wholesalers, in the main, have seven-day terms, and because of invoice finance we can offer longer terms so some, like our biggest single customer in Melbourne, may prefer to deal directly with us.

“At this time of year in particular, bottle shops can have a nightmare if they order more stock than they can sell – but because we have the Scottish Pacific facility we can offer good terms and bottle shops can stockpile with reserves, knowing they don’t have to pay us immediately.”

“So this style of funding is not just helping us, but also our bottle shop customers.”

Scottish Pacific is Australasia’s largest specialist working capital provider, helping thousands of business owners with the working capital they need to succeed. Scottish Pacific lends to small, medium and large businesses from start-ups to SMEs with revenues of more than $1 billion. 

Flexible Invoice Finance opens opportunities for Speciality Doors

Taking over a door-manufacturing business just as the economy stalled in the early 1990s, Keiran Wilson defied the odds and achieved business success for three decades on the back of superb craftsmanship, dedicated workers and a committed finance partner.

As he eases into retirement, Keiran Wilson can stop to reflect on his pride at running a door-manufacturing business in Victoria that held its own for 30 years in good times and bad.

“Our doors would be the best in Australia, I reckon,” says Keiran, who sold the business in January 2020.

He also acknowledges the role of ScotPac, which stood side by side with Specialty Doors and provided a long-term Debtor Finance package that guaranteed cashflow and business continuity.

“ScotPac, take a bow,” Keiran says. “You should know that you helped us keep 15 to 25 people in work over a 30-year period.”

 

Humble beginnings

In its factory in Noble Park, southeast Melbourne, Specialty Doors makes customised doors for major retailers such as Bunnings and Bowens. Keiran and his business partner, John Ellis, took over the enterprise in 1990 in the belief that it had great potential, even as the so-called “recession we had to have” started to take hold.

During his time at the helm, Keiran was renowned for insisting on high levels of craftsmanship and service, with the business’s joinery, flush panel, fire and steel-clad doors setting the standard in the Australian market.

He also had high expectations of his partners, and in ScotPac found a debt-financing provider that ensured reliable cashflow and allowed him to focus on the day-to-day issues in the workshop during a prosperous 30-year relationship.

“Paying the bills and getting sales, that’s always a challenge,” says Keiran, who had been a doormaker for about 18 years before buying the business. “But our customers were very loyal and we were very loyal to them.”

 

Tailored facilities

Early in the piece, ScotPac suggested Specialty Doors adopt Invoice Financing, an on-demand line of credit secured by one or more outstanding sales invoices. The facility allowed the business to make the most of its assets and unlock opportunities by converting invoices into a strong and fast source of cashflow.

Keiran explains: “We could send our invoices to ScotPac and they would fund 85 per cent of the value of those invoices. So that meant we straight away had cashflow.”

One of the other key benefits of using ScotPac, according to Keiran, is that the ScotPac team helped manage and track invoices and chased them up. “If a customer is a bit tardy with payments it’s better for an outside company to call them and say, ‘we’re waiting on a payment’, rather than for me to ring them. It doesn’t damage the relationship with the client.”

What was really important to the business owners was that ScotPac’s style of funding did not require personal assets as security, so Keiran and John did not have to put their family homes on the line.

 

Flexibility the key

By contrast, Keiran feels he did not get any favours from banks when he bought the business. He thought he had a handshake deal with his bank for an overdraft of $50,000. However, the bank backtracked and would allow just $20,000. “I’m not bank bashing, but I should have got the agreement in writing,” he says.

He says fortunately that made him look beyond the banks, and ScotPac could see the strengths and potential of the business – the on-the-tools experience of Keiran and John; the excellent clients Specialty Doors was attracting; and the existence of stock and plant equipment worth up to $300,000. “ScotPac were willing to give us a go,” Keiran says. Just as importantly, ScotPac took the time to understand his business and was happy to back Specialty Doors. Together, they never looked back.

 

Relationships, not numbers

While appreciating the financial assistance he received, Keiran makes special note of the relationships that developed between his team members and ScotPac’s representatives, who were there regardless of whether the economy was thriving or tough.

“During the lean times ScotPac let us go a bit over our overdraft when we needed to, but we always brought it back into line pretty quickly. They were nice to deal with – a very good company.”

While the solid relationship was a constant, one of the big changes he saw over his 30 years of being funded by ScotPac was due to technology. When the world moved online, “you could virtually send ScotPac your invoices on a Wednesday and the money was in the bank that afternoon”.

Now 75 and pursuing his passion for horse racing, Keiran is content in retirement. He is proud to have maximised the value of the business, turning a battling business into an operation that for many years, with ScotPac at its side, supported Australian workers and the manufacturing sector.

“We didn’t make a fortune, but it was a nice place to work,” he says. “We had good people working for us. It was a league of nations and we all got on well.”

Steelforce strengthens growth – and peace of mind – with debtor finance

Leading Australian and New Zealand steel distributor Steelforce is a great example of the trend towards larger, more established businesses using debtor finance to fund their growth strategies

Many growing businesses have war stories about the frustration of being unable to get a hold of their banker when needed, or about banks’ financial terms and conditions that stifle rather than enable growth.

When Steelforce, an Australian and New Zealand-based business involved in steel manufacturing, export and distribution, needed flexible finance to fund their growth strategy, they turned to debtor finance.

Matt Gerrard, Chief Financial Officer for Steelforce, said traditional banks had not understood their highly geared business and had wanted to provide lending with inflexible fixed repayment options.

“These fixed term loans and repayments did not allow us the flexibility to adjust our working capital within our industry’s pricing cycles, so in the early days we opted to go with debtor finance,” Mr Gerrard said.

“As an importer of steel we have large working capital requirements, and have to maintain sufficient inventory to meet customers’ demands and allow for long import lead times. Debtor finance helped us in our early rapid growth phase, assisted us when the market contracted after the GFC, and in recent years, as profitability and cashflow improved, has allowed us flexibility in our working capital decisions.

The business, with a turnover of $194 million, is towards the large end of the scale for a traditional debtor finance client, but this style of finance suited them because of their high debt ratio and desire for flexibility.

Debtor finance is becoming a funding option under consideration by a growing number of larger businesses interested in flexible funding that stays in tune with their growth strategies.

While Steelforce has been using debtor finance for a decade, they are relatively new to Scottish Pacific, having come on board as a client in 2016.

“We have been very happy with the people and the process. Our previous provider had a very rigid system, we have been delighted with Scottish Pacific as they have been far more flexible,” Mr Gerrard said.

“Regular drawdowns with ScotPac are simple, prompt and allow us to meet our supplier payments while minimising the interest we have owing to our financier. The flexibility to draw what we need, when we need it – without having to give advance notice – cuts down on the red tape, but more importantly minimises our drawdowns, saving us interest costs.

“I would recommend debtor finance to any companies with higher gearing and large working capital requirements,” he said.

With Scottish Pacific, Steelforce has a debtor finance facility as well as an export finance facility against their international debtors.

This allows Steelforce to maximise funds available for settlement and to meet the ongoing cashflow requirements of the business.

“Reporting requirements with Scottish Pacific are less than what we have been used to in our previous debtor finance facility and their checking of our collateral is far less time consuming,” Mr Gerrard said.

“Because we upload our invoice data to the ScotPac portal in our own time, they have the details to review and verify our collateral without the need for formal reporting and intrusive audits.

“The transition in terms of lending and back-office requirements was very easy, and their online platform is simple to use.

“ScotPac has a great team – they really tried to understand our working capital requirements and the sophistication of our own internal systems. I’ve been pleasantly surprised that the staff are always available. I’m not used to having that ease of access from a financial institution!”

Mr Gerrard said Steelforce had some reservations about whether customers would mistakenly think they were in trouble because they were using debtor finance (not the case with modern day debtor finance, which funds more than 4500 successful Australian businesses).

“Despite these minor reservations it has worked out well, and has all been pretty seamless in the end. Customer service is crucial for us, and our biggest concern was any disruption that our loyal customers would face when we changed funders,” he said.

“ScotPac has been responsible and professional throughout the process and all customers had to do was change a bank account name, no other action was required.”

Steelforce is a major Australian-owned steel manufacturer, trader and distribution group established in 2000, with more than 2,500 customers throughout Australia and New Zealand. They have 250 employees (150 in Australia, 100 at their steel pipe and tube mill in China). With a group turnover of $194m, and branches in Brisbane, Sydney, Melbourne and Perth, Steelforce have captured a significant share of the Australian steel market, with a diverse range of products including structural steel, pipe & tube and merchant bar. www.steelforce.com.au

When it’s famine or feast: Selective Invoice Finance & growth

To deal with the “boom or bust” factor in the mining industry, mining service businesses need to be backed by finance facilities that help them to ride out the troughs and take advantage of the peaks

SME business owner Neville Bartels is well aware of the cycles that dominate the mining industry – he created his business five years ago during the mining downturn.

His plan was to take advantage of the availability of so many experienced mining workers (himself included) who were being made redundant.

“Starting a mining labour hire business in a downturn was challenging to say the least, but if you can survive then it stands you in good stead when business conditions improve,” he says.

BNF Group provides specialised labour for the mining and engineering sector, placing managers, engineers, fitters, electricians and other specialist staff into longwall, pre-install, install, rebuild and servicing projects.

He says in the beginning BNF stood for “Big Nev Fix”, but the initials now represent “Bartels N Family”. BNF Group has matured into a successful family-owned business servicing mines including Kestrel, Moranbah North, Grosvenor and Broadmeadows.

“Teamwork makes the dream work”

Neville’s business motto is “teamwork makes the dream work”. This motto also fits his relationship with SME financier Scottish Pacific, who provide BNF Group with Selective Invoice Finance to help fulfil its growth strategy.

“When I started out, I bore the financial burden of funding the business. This was not sustainable if we were to grow,” Neville says.

“Luckily, in the early days our accountant suggested that as a start-up we could benefit from debtor finance. It was very sound advice.

“I researched debtor finance, found Scottish Pacific on the internet, and they talked about how Selective Invoice Finance might suit us. We were able to get things happening very quickly.”

Having a solid relationship with Scottish Pacific has given BNF Group the security to target growth of 30 percent for this year.

“In mining it’s either famine or feast. At any one time I can have six blokes or 60 on my payroll, and that’s why Selective Invoice Finance works so well for us.

“A client might need 20 or 40 roles filled immediately, and we have to be ready to provide payroll for them all. Selective Invoice Finance gives us the security that wages will be covered until client invoices are paid.”

The Queensland-based business has the confidence now to start branching out from labour hire. BNF Group recently secured sole distribution rights for a dust suppression agent in Queensland and the Northern Territory as well as parts of NSW.

“I’d recommend Selective Invoice Finance for start-up businesses. It’s the way to go, if you are not afraid to sacrifice a small part of your profit to gain larger profit,” he says.

“Really, the cost can be factored into your pricing, and the product used to drive growth.

“I plan to have Scottish Pacific as part of my business for as long as I’m in labour hire. Their team is so accommodating, they do so much for us and we’ve never even met them face to face.”

Neville, a field service engineer by trade, is philosophical about whether invoice finance is an expensive way to fund a business.

“Some might look at it as ‘expensive money’, but without that money I wouldn’t be in this business. It’s only expensive in isolation, not if you have the foresight to look at the big picture of the business.

“I was working as a rebuild manager for a large mining services company when the 2012 downturn hit and, like many other skilled workers in the industry, I was made redundant.

“After a successful patch contracting out my own services, I saw the business potential for skilled labour hire and so I created BNF Group.

“As a start-up, if I was going to the bank and asking for $250k to cover regular wages bills they’d look at me like I was mad.

“Strategically using Selective Invoice Finance has allowed me to operate a very profitable business,” he says.

Family Business Barking Up The Right Tree To Secure Growth

This Victorian garden mulch supplier, a family business run by three brothers, says debtor finance was the best way for them to free up short term capital to allow the business to expand.

The family business is now looking chipper thanks to their creative financing solution.

Two crucial business junctures for any family business revolve around succession, or the younger generation wanting to take the business in a different or larger direction than their parents.

Bark King, a family-owned business since 1975, supplies premium mulches and barks to metropolitan and rural areas around Victoria.

Director Stuart Johnston said the business, established by his parents, Harold and Dorothy Johnston, passed to him and brothers Robert and Jeffrey when their 86-year-old Dad died in 2003.

“We wanted to expand the business and bought new equipment, which was a big cost item,” Stuart says.

“We were using 5000 litres of diesel a day which was a huge outlay for us, and we wanted new equipment that would be more fuel-efficient.”

Their in-house accountant recommended they consider going to Scottish Pacific for debtor finance – they did so, and a decade later are still using debtor finance for the advantages it brings their business.

“Through Scottish Pacific our business has grown a phenomenal amount. Until we found them, we were really struggling because we were growing so quickly and had huge purchase outlays,” Stuart says.

“Using debtor finance has really helped our cash flow.”

Bark King employs 42 people, including a number of family members.

For other family businesses unsure whether debtor finance might be a good option for their growth, Bark King’s Stuart Johnston had this advice:

“Debtor finance was the only way we could free up short term capital to enable the business to expand,” he says.

“Having funds available on a weekly basis instead of between 30 to 60 days from invoices meant additional equipment could be financed to produce more sales. For us, it’s been a win-win situation.”

Bark King is a family owned business founded around 40 years ago, initially in road freight transport. Recognising market demand for garden mulch and bark products, Bark King developed their own client base and manufacturing facilities creating distinctive quality graded mulch.

Ink business finds a way to grow without signing away the family home

The experience of national ink distributor Xscite Inks Pty Ltd demonstrates the flexibility a debtor finance facility can provide when sales increase and the business enters a growth phase.

“If I request funds, they are in my bank account within hours.” – These words are music to the ears of any small business owner.

For David Booth, director of Melbourne business Xscite Inks, this is exactly what is provided by his debtor finance funding with Scottish Pacific.

Xscite Inks supplies HP inks and cleaning fluids for Large Format Digital Printers, and is Australia’s sole supplier of the ink, which is used on billboards, real estate and public transport posters and large point of sale posters at shopping centres.

David started the business in 2011, purchasing a $750,000 inventory, along with an installed base of customers, from the previous owner.

He had worked with Hewlett-Packard for 27 years before moving to another technology business that was bought by venture capitalists, who planned to shut down the division David was running.

“My division was not core to their business strategy so they asked if I wanted to buy it, on the proviso I took all existing inventory. My co-worker came with me to start Xscite Inks,” he says.

“After so many years in business, this was the first time I had run my own business. It has highs, and stresses, that are totally different to when you are working for someone else.

“I negotiated extended trade terms but needed cash to finance the large inventory purchase. I could see the payment date approaching and I was pretty worried about the impact that large outgoing would have on the business.

“My accountant, who helped me set up the business, explained that I had two options: get a bank loan and put my house on the line (I was not keen on this option), or debtor finance.”

David didn’t know much about debtor finance but his accountant explained how it worked, and recommended two providers, one of whom was Scottish Pacific.

“I met with Scottish Pacific and explained how we had an installed base of customers and guaranteed volume, and they were very supportive, setting up the financial model for us.

Initially Scottish Pacific offered David a $500,000 facility, which has recently been expanded to $750,000 to cater for the 25 percent growth in the business over the past year.

“We are in a very niche area – I think we are the only ones in Australia who just distribute this ink (there are some who sell the ink and do printer repairs),” David says.

“Yet we really feel Scottish Pacific understands our niche business. They also offer significant benefits that far outweigh the additional costs of using debtor finance.

“The systems and processes they have in place for invoicing and payment make this side of the business, which could otherwise be quite painful, extremely quick and effortless for us.”

“For a growing business that doesn’t have the cash reserves to meet demands, debtor finance is an excellent funding model,” according to David.

It’s flexible, you can quickly vary the amount borrowed when and if you need it, and you get immediate access to funds.”

Xscite Inks Pty Ltd sells and distributes HP’s range of inks and cleaning fluids for Large Format Digital printers, with a comprehensive inventory of all inks and quick delivery for customers. www.xscite.com.au

A Funding Lifebuoy Rescues New Zealand Metal Casting Manufacturer

Significant growth threatened to dent Wickham Foundry – debtor finance eased the pressure, helped the owner right the ship and allowed for steady growth.

Wickham Foundry Ltd is a New Zealand-based non-ferrous founder and powder coating business, dealing mainly in casting aluminium, bronze and cast iron.

The foundry manufactures jet boat parts, reduction gear boxes, castings for the fuel industry, park benches and other outdoor furniture. Sole owner John Clark says the business has good steady growth, employs 10 people in Christchurch and has customers all over New Zealand.
The future for John’s business was not so bright 15 years ago, when the breakup of his marriage threatened its very survival: with his ex-wife wanting to walk away from the business and John wanting to continue to trade, he found himself with a debt of $116,000.

In 2006 John bought out Woolston Foundry and amalgamated it with his own company, Rangiora Foundry, to create Wickham Foundry. This amalgamation meant that the size of the business had grown dramatically and John had to service a $300,000 debt. In 2001 John approached Scottish Pacific to provide him with the capital to help Wickham Foundry thrive. A debtor finance facility gave the company the cashflow required to pay its wages and bills.

“I would advise any small business struggling with cashflow to use the factoring system. It’s a helping hand. We may not have survived in the early 2000s without Scottish Pacific,” said John.

“With Scottish Pacifics’ help over the past 13 years, we are now standing alone and have found that by consolidating our debt and by using a revolving credit facility, we are saving up to $3000 per month in fees and interest.
“Our goals are to increase our profit margins each year and of course to reduce debt. Currently the business has good steady growth and we hope to continue this.”

It is not uncommon for business owners to approach them for help after a divorce. Often one partner gets the business and the other the family home – meaning the home is no longer available to secure the business borrowings. Debtor finance can replace the borrowings that were secured by the home in these situations. For more information on how we can assist in this particular scenario, read our article on divorce and business.

Allstaff Australia

One of the most popular funding options for growth recruitment businesses is debtor finance, as the line of credit grows comfortably with the business. National recruiter Allstaff Australia came to debtor finance as a short-term solution but found it a valuable long-term funding option.

Over the past decade Allstaff Australia, a blue collar recruiting business founded in Canberra, has grown from $10 million annual turnover to the $90 million mark.

It is this growth that was the biggest reason for the business owner, Glen Johnson, to choose debtor finance – “it is a funding solution that really allowed us to grow”, he says.

“Our personal assets were enough to run the business when it had a $5 million turnover, as we could fund that with an overdraft.
“We were actually using one of the big four banks and when an overdraft wasn’t enough we tried debtor finance with them, but at some point they just weren’t interested in letting us expand.”

They turned to Scottish Pacific about ten years ago and haven’t looked back since.

Today Allstaff Australia provides permanent, contract and temporary staff to a range of industries including engineering, construction and trade, nursing, supply chain and logistics and government, with their biggest client being Woolworths.

The business has been franchised into each state. With fairly narrow margins, Mr Johnson says debtor finance provided the capital needed to support the growth of the business.

He says communication is easy with Scottish Pacific, and he has appreciated the great continuity with their staff.

“With our bank, we’ve had six different account managers in 10 years. Scottish Pacific have been able to give us a very continuous service.”

Allstaff Australia is an independent and Australian-owned national recruitment organisation offering an extensive choice of permanent, contract and temporary candidates to companies and a wide range of job opportunities to those considering their next career move. Since 1991, Allstaff Australia has delivered recruitment services to some of Australia’s leading organisations. http://www.allaus.com.au/

Ribs and Roast

When this cooked meats specialist realised they were outgrowing their factory and having to turn away orders, they committed to an ambitious expansion plan that they knew would stretch their cashflow and require a review of their funding arrangements.

Ribs and Roast services major steakhouses across the country, and also have retail lines with some of our major retail giants.

General Manager, Ryan O’Shea, said by 2013 the business was struggling to keep up with orders due to the size of their Sydney factory (300-400 square metres).

“We were getting so much interest in our products, it was very frustrating having to turn down business due to our limited capacity,” he said.
“Our broker referred us to Scottish Pacific and their Debtor Finance facility allowed us to have peace of mind around cash flow while we transitioned to a bigger factory.”

Debtor finance allowed the business to cope during a period of great growth – an estimated 50 to 60% growth month on month for the business, which has been trading for about six years.

While some SMEs have the misconception that once you start using debtor finance it’s hard to move on, Ribs and Roast is a great example of a client using this type of funding to navigate their way through a growth phase.

The business continues to grow thanks to the new factory, where space has more than quadrupled to 1500 square metres.

“Debtor finance allowed us to buy better – we had to purchase a lot of raw materials to enable us to service new clients, knowing that we wouldn’t see the money for some time from these clients, so we needed the facility to help us,” Mr O’Shea said.

“Scottish Pacific sat us down, told us how it would operate and about the benefits and costs involved. We went in with our eyes open – they were very up front about how to use it to suit our business. I was impressed because their staff genuinely wanted the best for our business and their great advice showed they were not just out to make money from us.”We have now established great relationships with our new clients and our margins are higher due to the expansion and being able to produce to scale.”

While using debtor finance was a short term lending solution to help them through the relocation period with so many set-up costs, O’Shea said he would have no qualms about using debtor finance next time the business expands. He has been so pleased with Scottish Pacific that he has already recommended them to three businesses in his network.

Ribs and Roast is a national business six years young, but with 20 years’ combined experience of sous vide cooking. www.ribsandroast.com