By:
Dan Verdon
Director of working capital solutions NSW Octet
It’s definitely a mixed market. Not all SMEs are experiencing the same conditions. Most challenges are about cash flow timing, not the viability of the business itself.
The businesses we work with are looking for flexible working capital solutions and want to continue to grow.
For the day-to-day for businesses, if they don’t have the cash flow they require, it’s hard to grow. It’s hard to continue purchasing stock, accept larger contracts, or take on more work. It might be difficult to hire more staff because they haven’t got the working capital to do that.
So what it does is hamstring businesses and stop them from growing because they haven’t got access to cash. Growth becomes constrained, and, even though they might have a lot of demand, they just can’t actually service that demand.
We’re seeing a lot of businesses that want that flexibility. They want to be able to access different finance products that can assist with cash flow.
Generally speaking, we’re seeing more prepared businesses these days. However, most want to get a fairly quick result, and they want the facility to grow with them.
More traditional funding lines would generally have a certain limit. Once you’ve capped out at that limit, you can reapply with the bank, and that might take months.
With our products, particularly receivables finance or debtor finance, the limit will always grow with the clients’ requirements. So if they have a big quarter or a busy month, we’ll be able to facilitate that growth.
All of our brokers will have different clients in different sectors and industries. Every broker will have clients experiencing cash flow issues.
All of our brokers will have different clients in different sectors and industries. Every broker will have clients experiencing cash flow issues.
- Dan Verdon
The first place to start is by reviewing the businesses involved in B2B transactions. If we’re talking about receivables finance, we’re talking about businesses that have a receivables ledger, so we can add value by bridging the gap between when the business invoices and when they get paid.
So if it’s business-to-business, if there are cash flow issues, or if a client is complaining that they’ve got no cash because all their funds are tied up in their receivables, that’s a really good clue that debtor finance or trade finance might work for them.
All of our brokers will have different clients in different sectors and industries. Every broker will have clients experiencing cash flow issues.
The first place to start is by reviewing the businesses involved in B2B transactions. If we’re talking about receivables finance, we’re talking about businesses that have a receivables ledger, so we can add value by bridging the gap between when the business invoices and when they get paid.
So if it’s business-to-business, if there are cash flow issues, or if a client is complaining that they’ve got no cash because all their funds are tied up in their receivables, that’s a really good clue that debtor finance or trade finance might work for them.
All of our brokers will have different clients in different sectors and industries. Every broker will have clients experiencing cash flow issues.
- Dan Verdon
There are lots of different elements to that. We find at Octet that we really assist a big proportion of our clients who are going through a growth phase. They want a lender to facilitate that growth, and we can do that in several different ways.
But in terms of identifying clients, it’s really about asking: is there a cash flow gap, and can we add some value? By having a chat on the phone and understanding a bit about the business, we can tell them that pretty quickly.
Receivables finance has been more of a mainstream product over the last few decades, but it’s still not like an overdraft or a mortgage, where pretty much everyone understands what the product is.
A lot of people overcomplicate debtor finance, but it really is quite simple. All we’re doing is bridging the gap between when the client invoices and when they get paid. There’s a clear cash flow gap there that we can assist with.
A lot of people overcomplicate debtor finance, but it really is quite simple. All we’re doing is bridging the gap between when the client invoices and when they get paid. There’s a clear cash flow gap there that we can assist with.
- Dan Verdon
With trade finance, historically, it’s been known as quite an onerous, labour-intensive product. We’ve created a product where we rely on technology and make the process seamless.
We are focused on solutions. Brokers need to get an outcome, so we’re very quick to workshop a transaction and let the broker know if we can do it and what we can do. But we also let them know very quickly if we can’t do it. There’s absolutely no point dragging out a transaction. We’re very realistic about what we can and can’t do.
We really feel that every SME is different and unique in its own way. So it’s our role to really understand what the requirement is.
It’s not a one-size-fits-all product. We try to drill down, with the help of the broker and the client, to really understand exactly what they need. Then we try to present and deliver a solution.
Dan Verdon
Director of working capital solutions NSW Octet
