Case Study
Debtor Finance smooths supply chain for importer/wholesaler
Late payment hindered supply chain
Cash flow is a major priority for local importers who must outlay large sums of money before their cargo can be released from docks and sold to retailers.
While the goods may already be on order for retailers awaiting delivery, they are of no business value sitting on a shipping container.
For importers to stay ahead of the cargo delivery cycle, they must maintain a healthy cash flow that is largely dependent on prompt invoice payment from customers.
However, it is not uncommon for retailers to take up to 90 days to pay their suppliers.
TGI Imports, a Western Australian importer of garden torches, candelabra and other high quality homewares, has a large customer base of small to medium size retailers.
To overcome the predictable cash flow problems which can seriously hinder an importing business, TGI Imports have opted for factoring to manage their accounts payable function.
“Factoring has been a part of our management strategy for three of our four years in business,” Sandra Gillard, Proprietor of TGI Imports, said.
“We pay our own bills and invoices for overheads when they are due, which includes amounts of up to $75,000 for shipment containers carrying merchandise. There are no credit options for container release which means we have to manage our cash flow diligently,” Sandra said.
A tailored approach benefited bottom line
TGI Imports is a small team of three full time staff and a pool of casuals called on in busy times.
“Having Bibby Financial Services look after the entire invoice process frees me up to concentrate on sales to grow the business,” Sandra said.
“Surprisingly, having Bibby on side has enhanced my sales style. Now when a sale is clinched it is genuinely exciting because I know Bibby will give me the money straight away. That certainty gives me confidence in negotiation which ultimately improves my sales technique,” she said.
“Bibby is able to think laterally, which is very important to me. They do not simply apply standard rules to each client. Instead, they work with me to achieve the best possible result for my situation,” said Sandra.
“There is significant mutual value in our 2 year relationship with Bibby. With that comes flexibility on their part, which is vital in our line of business”
“Bibby has a good understanding of the limitations of small business operations. Our partnership with Bibby gives us some of the securities of a large business, which enables us to look at expansion opportunities.
“You have to think big to become big. Bibby helps us move toward being a bigger, more profitable enterprise,” Sandra said.
The actual names of the entities and individuals in this case study have been withheld for privacy reasons.