Working capital fuels growth for a family-owned pharma manufacturer
Manufacturing to world-class standards is one thing. Funding it is another. This Brisbane contract pharmaceuticals manufacturer had finance in place, but the structure never quite matched how the business actually traded. Connective Cashflow powered by Octet built a working capital solution across debtor finance, trade finance and a term loan — releasing cash, funding suppliers and creating a stable platform for business growth.
$1.2m
Debtor & Invoice Finance
$500k
Trade Finance
$1m
Term Loan
Australian pharmaceutical manufacturing is a $12.3 billion industry, according to IBISWorld, and a demanding one. Manufacturers buy imported ingredients well ahead of production, carry TGA licensing costs regardless of output, then wait to be paid. For one Brisbane family manufacturer, the challenge was finding finance that fit that cycle. Connective Cashflow powered by Octet delivered debtor, trade and term finance on one platform.
The challenge
For almost 30 years, this Australian family-owned contract manufacturer has built its reputation on getting the details right. Operating from Brisbane, it provides end-to-end product development, manufacturing and packaging for the pharmaceutical, nutraceutical, skincare and wellness sectors, supplying leading pharmacies, supermarkets and grocery brands across Australia and overseas. Its TGA, FDA and ISO 22716 certifications are credentials that take years to earn.
What those certifications don't do is pay for raw materials.
Like every contract manufacturer, the business funds each order long before it earns from it. Ingredients and packaging are sourced and paid for. Production is scheduled and run. Finished stock is tested and released. Only then does an invoice go out, and only then does the payment clock start. Across that entire cycle, cash primarily moves in one direction: out.
It's a pressure felt across the sector. CreditorWatch data shows late payments have hit a six-year high, with manufacturing among the industries most exposed to overdue invoices.
The business wasn't short of finance. It was short of finance that fit.
Its existing trade facility hadn't been structured around the realities of its cash conversion cycle - the gap between supplier payment terms on one side and debtor terms on the other. And with trade finance and debtor finance sitting on separate systems at its previous financier, every transaction carried duplicated administration.
Then a third need arrived, and it arrived urgently: additional working capital, in the form of a term loan.
"The client didn't have a funding problem, they had a structure problem," the Connective broker said. "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. That's a frustrating place to be when you're trying to grow."
The solution
The broker then introduced the business to Octet through Connective Cashflow - the working capital solution developed through Octet's partnership with aggregator Connective, giving Connective brokers direct access to Octet's non-bank lending platform for their SME clients.
Rather than replacing one facility and leaving the rest unresolved, Octet looked at the whole trading cycle and structured three facilities to work together:
- $1.2 million debtor finance facility - releasing cash tied up in the invoice ledger
- $500,000 trade finance facility - funding supplier payments, structured around actual supplier and debtor terms of trade
- $1 million term loan - delivering the urgently needed additional working capital
"This is a business manufacturing to world-class standards, and the finance simply wasn't keeping pace with it," said Allan Howe, Director Working Capital Solutions, Queensland at Octet. "Our job was to build a structure around the way they genuinely trade - when they pay suppliers, when their customers pay them - rather than asking them to trade around the structure."
Debtor finance and trade finance both move with the trading cycle — one releasing cash from the invoice ledger, the other funding supplier payments as orders are placed. Both are powerful, and both are tied to activity that has already happened or is already committed.
Given the urgent funding need, the term loan delivered the additional working capital the business required at the moment it required it, while the debtor and trade facilities got on with the daily work of keeping cash moving.
The change the client felt most immediately was consolidation. Octet's platform brings trade finance and debtor finance together in one environment - something that wasn't available with the previous financier.
"Brokers tell us the same thing repeatedly: their clients don't want three logins and three relationships. When trade and invoice finance run on one platform, supplier payments and receivables stop being separate conversations. It removes friction, and it gives the owner a clear view of their working capital position."
Allan HoweDirector Working Capital Solutions, Qld
The result
The combined facilities have delivered what the business needed most - additional working capital to finance expected growth over the short to medium term, and a stable foundation to build on.
Suppliers can be paid on time. Cash no longer sits idle in the ledger. And when a larger order lands, the question becomes whether the business wants it, not whether it can fund it.
"What I appreciated was how straightforward Octet made it," the broker said. "I brought them a client with three separate needs and they came back with one solution. For a broker, that's the difference between a deal that drags on and a deal that gets done."
Manufacturers, wholesalers, importers and distributors share the same underlying challenge: paying suppliers well before customers pay them. Connective Cashflow gives brokers a direct path to solving it - debtor finance, trade finance and term lending from a single working capital specialist.
If you're a Connective broker and have a client caught in the cash flow gap between supplier payments and customer receipts, book a meeting with your Connective Lending Manager or Connective Cashflow BDM, who can help structure the right cash flow solution.
Other brokers interested in partnering with Octet to explore cash flow solutions for their clients can read more about our flexible working capital facilities.
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Disclaimer: The above article content and comments are our views and should not be construed as advice. You should act using your own information and judgment. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgment as at the date of publication and are subject to change without notice.
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