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Importer switches to Cash Resources

by Brad on

In 2008, a small importer of specialty ingredients required funding to overcome a serious cash flow shortage. The company provides specialty ingredients for food manufacturers, particularly baking.
They had sourced a number of new products from Asia and were forced to commit to substantial minimum orders. While they knew that the products would be sold eventually, they had rented storage facilities and had to carry a larger than expected inventory. In addition, average collections were drifting out to around 50 days.

Due to a lack of security their bank would not provide funding so they ended up choosing another invoice discounting company. However, they began to realise that this facility simply did not suit their needs.

According to the director. ”We were forced to use the facility for every single invoice we raised. We had three or four customers who would pay promptly in 14 days, so we were wasting money putting them through invoice discounting. We sat down and explained the situation to them but they were so inflexible and they also reminded us that we were still subject to a 12 month contract.” he said.

“In addition, we were really unhappy with the level of service provided by the finance provider. As we approached the end of the contract, I made it my priority to look for an alternative invoice discounting provider. We investigated two other companies and eventually chose Cash Resources Australia,” he said.

“We have been delighted with the outcome. The standard of service that we received far exceeded our expectations. Most importantly, the flexibility of the facility really suits our needs. They are much more proactive and take a keen interest on how we are going.” The director said.

Debtor Finance Helps Companies to Survive Tough Economic Times

by Brad on

Cash Resources recently conducted a survey of its current customers throughout Australia.

Among the findings:

80% of customers with Invoice Discounting felt they were better positioned to ride out tougher economic conditions than their competitors.

When asked what business benefits Debtor Finance had provided, their responses were:
• Cash flow predictability/financial peace of mind 38%
• Enabled them to concentrate on their core business 18%
• Provided the funds to grow their business 31%
• Other 13%

Companies were also asked what was the single most important feature of Debtor Finance that made them proceed with the facility:
• The flexibility – you don’t have to use the facility on all invoices and there are no long term, locked in contracts 49%
• The speed in which the facility was put in place 22%
• Its confidentiality 15%
• Other 14%

Lack of working capital can be fatal

by Brad on

Working capital measures the efficiency and short-term financial health of a company. Small business owners need sufficient positive working capital to operate successfully. A lack of working capital presents many disadvantages to small businesses.

Hard to Attract Investors
A small business that lacks sufficient working capital may find it difficult to attract investors and lenders. Working capital shows investors and creditors that a company possesses the ability to pay back its loan or can earn a sufficient profit that allows investors to earn a return on their investments. Some creditors may require a company to use its assets as collateral. Creditors may view companies without working capital as a risk. The inability to attract investors and lenders may affect a company’s ability to purchase necessary resources.

Day-to-Day Operations
Working capital measures a company’s ability to turn shortterm assets into cash. A lack of working capital may jeopardize a company’s ability to finance its day-to-day operations. Day-to-day operations in a small business typically include salaries, inventory purchases and equipment needs. A lack of working capital also makes it difficult for a company to prepare for emergencies. For example, if a company loses a majority of its inventory to unforeseen circumstances, a lack of working capital makes it difficult to replace the inventory to operate.

Difficult to Grow Business
Positive working capital allows small business owners to grow in the future. When a company desires to grow or is trying to meet customer demands, it often purchases additional assets needed to manufacture products or offer services at a quicker pace and on a larger scale. A lack of working capital hinders a company from acquiring what it needs to expand. If a company continues to experience problems with growth, it may find itself losing customers to competitors.

Improving Working Capital
Small businesses struggling to maintain a positive working company must take steps to improve the situation to remainviable.

The Cash Resources Advantage
One of the best ways to improve your working capital is to use a Cash Resources Debtor Finance Package. As you deliver your goods and services, you raise invoices outlining payment amount and terms. Without the knowledge of the customer, the invoice copies are then sent to Cash Resources Australia. Cash Resources Australia advances up to 80% of the value of accepted invoices within 48 hours.

CRA Structures a Working Capital Solution for Fitweld

by Brad on

Ten years ago, Clyde Hawkins established Fitweld Engineering Pty Ltd. A fitter & turner by trade, Clyde has also worked in management positions for a number of engineering companies. Fitweld Engineering was established to provide steel fabrication, mechanical engineering and construction, fabrication welding and industrial welding. The core business became structural steel fabrication for local commercial building projects such as schools, libraries, offices and shops. They also manufacture components for the underground storage and transfer of petrol
at service stations.

The business grew quickly and soon they had 22 staff members, however, the growth came with some problems. As Clyde explained, “We would order in steel, then often take two to three months to fabricate the steel and deliver it to the site and then wait 30 to 60 days for the bulk of the payment. Quite often, with progress payment systems in the building industry, we would not receive full payment for nearly 12 months”.

“In the meantime, we had to pay salaries and other fixed overheads. In addition, the steel suppliers were not prepared to wait for their money”.

As a result, the company faced a serious cash flow problem. They spoke with a local finance broker who investigated a number of options. “We looked at traditional bank overdraft facilities, however the facility and security required would have been massive. Not too mention the interest rate and fees”,Mr Hawkins said.

“We also looked at debtor finance through the bank, however they required all invoices to be put through the facility and a long term contract”.

“The broker then suggested Cash Resources and we were so impressed with the flexibility of their services and their eagerness to help us out”.

“The big difference between the banks and Cash Resources is the banks will only consider past trading history while Cash Resources will sit down and get a good understanding of your business and its potential. Cash Resources has become like a partner in our business. Mark Butler is always proactive and quick to respond to our enquiries.

For example, before Christmas, Mark understood the normal slow down in the building industry over the break and proactively offered us additional funds against ‘In Progress Invoices’. That’s the type of service that sets Cash Resources apart from other companies”, he said.

“Another example was a couple of years ago where we supplied steel to a site that was subject to industrial action and in that case we would not have been able to continue operations without the assistance of Cash Resources”, Mr Hawkins said.