Name: Bella Confectionery
Location: Victoria
Industry: Confectionery Manufacturer and Distributor
“We chose Bibby because we wanted to control our financial position as well as to free up our time to focus on the strategic direction of the business."
An annual balancing act
Maintaining cash flow during seasonal fluctuations is a critical balance for any SME.
Seasonal demand fluctuations that require significant capital outlays and in some cases delayed receipt of revenue can lead to serious cash flow problems.
Problems are only exacerbated when existing finance agreements are unable to accommodate anticipated and unforeseen demand hikes.
Consider this equation for Australian confectionery manufacturer and distributor, Bella, whose busiest time of the year is naturally the Easter period.
To counter the risks of outlaying considerable resources and carrying a large debtors ledger, the chocolate and confectionery manufacturing company turned to cash flow finance as the working capital option best suited to the nature of its business.
Michael Harvey, Managing Director of Bella Confectionery, employs Bibby Financial Services to provide factoring for its business that services wholesalers and supermarkets nationally and throughout New Zealand.
“Leading up to and during the Easter period we need to employ extra staff, purchase more raw materials and boost marketing activity to meet demand that may not equate to cash flow for weeks,” Michael said.
“In the meantime we are obliged to pay immediately recruitment companies who supply personnel and honour supplier contracts as well meet our fixed overheads such as rent and tax.
Flexible solution to meet seasonal cash flow challenges
“With Bibby, we receive cash valued up to 85% of our invoices within 24 hours which eliminates any potential cash flow crises we encounter during demanding times,” Michael said.
Factoring provides a flexible source of finance by allowing businesses to unlock the funds tied up in unpaid invoices – leading to an immediate injection of cash.
Businesses send a copy of their invoices to Bibby Financial Services who then convert up to 85% of the unpaid invoices into cash within 24 hours. Businesses can then draw down on this fund pool at an interest rate. Once the debt has fully been collected by Bibby the remaining 20%, less a fee, is transferred from Bibby to the business.
This process is also referred to as discounting, though factoring offers an added service to collect payments on behalf of the business and maintain professional and detailed accounts to your transactions.
Business operators using Bibby can keep track of payments received and the amount of funding available online.
Factoring saved management time and protected the bottom line
Before employing Bibby to take charge of his business finances, Michael found that he was struggling with debtors who were consistently paying invoices outside of 30 days.
“Prior to Bibby, I was forced to offer debtors significant settlement discounts to encourage their prompt payment.
“Collectively, these discounts would reduce our bottom line significantly.
“We chose Bibby because we wanted to control our financial position as well as to free up our time to focus on the strategic direction of the business.
“Although we have only been with Bibby a short time I have noticed an increase in management productivity and look forward to future growth.
“I am confident in Bibby’s flexibility for growing with the business and now have new confidence in my own business decisions because we are no longer held hostage to our cash flow,” he said.
Peter says, “Using Bibby Financial Services has really turned things around for my company. Bibby have been great, they are approachable and informative. The best thing about using Bibby is that they give me the money tied up in my invoices to keep my cash flow fluid, as well as providing me with Sales Aid Leasing which provides me with an opportunity to sell more product to customers by providing a funding solution that meets their needs. It is a ‘win win’ situation for me. ”