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Why are Accountants missing opportunities?

Accountants understand the benefits of using invoice finance, but they are not recommending the option to clients, according to a recent UK survey.

Of the 100 Accountants surveyed more than two thirds (67%) have never made use of invoice finance for their clients.

Despite this, more than half (56%) said at least one of their current clients would benefit from this kind of facility, while some respondents said they had up to 20 clients who would benefit from it.

The survey showed what the industry has long suspected. While the majority of Accountants understand the benefits of utilising invoice finance, they are simply not recommending it to clients as a cash flow solution.

Invoice finance has all too often been viewed as purely a last resort, however this is not the case. Invoice finance is best used as a catalyst for growth and a means by which a business can prosper and thrive.

When it comes to what keeps clients awake at night, most of the respondents said cash flow problems were top of their list, along with debtors paying late and loss of revenue.

Food Manufacturer Grows with CRA

Eighteen months ago, a Brisbane-based food manufacturer required funds to grow the business. They already had funding facilities available, however they required a lender to provide a flexible funding limit that could grow as the company grew.

The company imports raw materials, manufactures here in Australia, wholesales to distributors who service the food service industry, selling other products direct online and now exports to Europe and United States.

The cash constraint the company faces is that often they are outlaying funds 2 to 3 months before they are paid. Not only do they pay for the raw materials upfront, they pay for packaging and salaries to manufacture the products.

As the owner of the business explained “We have a lot of export enquiries that the company simply couldn’t fund. It was a government advisor who suggested we look at Invoice Discounting”.

“Unlike other companies Cash Resources provides a very flexible service. We choose what invoices we submit, there are no minimum volumes and no lock in contracts”.

The business initially started in a garage at home, however with the right funding  in place the business has achieved spectacular growth in the last two years.

“Without Cash Resources we wouldn’t be in the position we are in today. They have enabled us to grow from a small business to a medium business in a very short space of time”, the owner explained.

Thorn Group – Building For the Future

In the last issue of Balance we reported that Cash Resources had been acquired by The Thorn Group. In this issue we provide you with a background to the company.

Thorn Group is one of Australia’s leading financial services providers, meeting the needs of niche consumer and commercial markets.

Thorn Group was listed on the ASX in 2006, backed by solid beginnings nearly 80 years ago, when Radio Rentals opened its first store in 1937. Today Radio Rentals / Rentlo is a household name with over 90 outlets around the country. Other group businesses comprise of Thorn Financial Services; providing consumer loans under the brands Cashfirst and Thorn Money and Thorn Equipment Finance; providing commercial finance and NCML, a full service receivables management company.

The underlying strength of Radio Rentals / Rentlo has enabled Thorn Group to achieve substantial growth in recent years, providing a platform for developing newer businesses which are now broadening Thorn Group’s revenue base.

Over the past few years, Thorn Group has invested in extending its range of financial services, targeting a wider demographic with a view to meeting the needs of many more Australians, as it seeks to become a significant participant in the financial services sector.

Key components of Thorn Group’s strategy are to continue to renew existing businesses to make them relevant to customer needs, develop new products and services, consider acquisitions as opportunities and to ensure growth is within the values and guidelines that the group has established.

Thorn Group Executive General Manager, Matt Ingram said, “I am excited about the acquisition, our business customers have been asking for a working capital solution for some time and we see CRA as a natural fit to our operations.”

CRA has forged strong relationships with its clients, with numerous examples throughout their client book of strong and profitable dealings stretching back over 10 years. CRA have approximately 200 clients across a variety of different industries, ranging from concreters to training providers, security firms to mining services companies. This is something Thorn Group hopes to build upon as we offer new and exciting products to existing clients and ensure we are working hard to assist them in managing their ongoing business finance needs.

When Success Can Turn to Failure

Business failure is often achieved by overtrading: selling more than you are capable of dealing with, with respect to your finance and resources. The prospect of a sudden increase in growth by most business owners will give them enthusiasm to do whatever it takes to achieve this.

The most common outcome of doing so is the business becoming insolvent, hence business failure. The moral is that fast growth is not always good growth, however, steady growth is good.

Insolvency by overtrading is usually caused because your business will have to borrow more money to compensate for extra staff, materials and all associated costs of meeting the increased demand. If customers then buy from you on credit, it can often lead to your business becoming insolvent.

One way to avoid overtrading is to try to arrange a source of funding, such as invoice discounting, that you can use as and when you need it.