Cash Resources recently assisted a growing carpet importer from a tight financial situation.
The business imported luxury carpets from around the world and supplied these to builders of prestigious homes across Australia. They also operated a retail outlet that sold carpets direct to the public. However, over 85% of its revenue came from its wholesale operations.
The business had been operating since 2004 and had enjoyed consistent growth until the GFC took effect. Business slowed during this period as the premium end of the building market was hit hard. The business was scaled back and more focus placed on the retail arm.
As the effects of the GFC receded, they had a couple of builders who continued to provide a good flow of business despite a weaker building market. However, what was to become a sign of the times, payment terms were stretching out.
In the meantime, the owner of the business had sourced a flooring system from Asia which opened up other opportunities in other sections of the market. They had a number of volume builders interested in the product, however the manufacturers insisted on stringent payment terms so funds became an issue.
“We already had advance orders for the product,” explained the owner of the business.
“Unfortunately we had already extended our bank overdraft to cover deficiencies in our cash flow. We also looked at securing an equity partner but could not find anyone we could work with,” he said.
“Things were looking pretty grim for a while. Eventually we were recommended to Cash Resources. I had not heard of Invoice Discounting before and had no idea how it worked,” the owner said.
“Initially, we kept the bank overdraft in place but supplemented it with an Invoice Discounting Facility from Cash Resources.”
“Being able to access funds against the sales from our core business was all we needed to get the new part of our business up and running.”
“Cash Resources were extremely helpful. With no locked in contracts, we can choose what invoices we put through the facility and it is completely confidential,” he said.
“The facility has now been in place for nearly 18 months and the business has gone from strength to strength. We have terminated the overdraft facility and as our business grows the funds available from the Cash Resources Invoice Discounting facility also grows,” the owner said.