Justin Morris, Director of HCQ Finance had a manufacturing client outgrowing its existing finance arrangements. The business, an Australian family-owned contract pharmaceutical manufacturer operating from Brisbane since 1988 had a cash flow problem that will sound familiar.
The business is TGA, FDA and ISO 22716 certified, supplying pharmacies, supermarkets and grocery brands across Australia and overseas. Demand wasn't the issue. Its finance was.
The existing funding facility hadn't been structured around the business's cash conversion cycle - the gap between paying suppliers and being paid by customers. Trade and debtor finance sat on separate systems at the previous financier, doubling the administration. And a term loan was needed urgently.
"The client didn't have a funding problem, they had a structure problem," Justin says. "The facilities were there, but they weren't talking to each other, and the timing never quite lined up with how the business actually trades."
Justin introduced the client to Octet through Connective Cashflow. With Connective Cashflow providing two revolving credit lines to solve both sides of the cash flow equation, with no upfront real estate security, rather than repairing one facility and leaving the rest, Octet built around the whole trading cycle:
Trade and debtor finance now run on a single platform.
"Debtor and trade finance manage the rhythm of the trading cycle, and the term loan gave the business a base layer of working capital underneath it," says Allan Howe, Director Working Capital Solutions, Queensland at Octet. "Our job is to build around the way a client genuinely trades - not ask them to trade around the structure."
The client now has the working capital to fund expected growth, and a stable platform to build on.
"I brought Octet a client with three separate needs and they came back with one solution," Justin says. "For a broker, that's the difference between a deal that drags on and a deal that gets done."A
Settled Connective Cashflow deals earn brokers upfront commission, ongoing trail and airline reward points. Clients can collect points on facility usage as well.
And you don't need to structure it yourself.
"Brokers don't have to be working capital specialists to write this business," Allan says. "If a client is invoicing other businesses and feeling the squeeze between paying suppliers and getting paid, that's the signal. Spot it, refer it, and we'll do the rest - or workshop the scenario with your BDM first."
