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