invoice finance Archives

ATO tax crackdown on small business: Are you ready for stricter compliance?

Posted on June 7, 2025June 15, 2025 by Russell Walsh

From 1 July 2025, Australian small and medium-sized businesses will face intensified scrutiny under the Australian Taxation Office’s (ATO) $1 billion compliance crackdown. While the initiative is designed to target tax evasion and level the playing field, even honest SMEs will come under the microscope.

ATO Deputy Commissioner Will Day says only a small portion – around 5% – of small businesses are deliberately avoiding tax. But that still leaves a significant $17.7 billion tax gap, largely driven by mistakes, opportunistic behaviour, and poor record-keeping.

With audits set to increase and data-matching tools becoming more advanced, even businesses doing the right thing may find themselves subject to greater scrutiny. That’s why now is the time to double-check your records, revisit your tax strategy, and act early if support is needed.

The majority of SMEs are already doing the right thing. Staying proactive will ensure they’re not caught off guard as the ATO’s new measures take effect.

Carrying ATO tax debt is getting more expensive

From 1 July, managing tax debt will become more costly for SMEs. “Small businesses’ tax debts continue to be too high,” said Day. The ATO reported $53 billion in collectable debt at the end of FY24 – $35.6 billion owed by small businesses.

New legislation removes tax deductions for ATO interest charges, including the General Interest Charge (GIC) and Shortfall Interest Charge (SIC). With GIC already exceeding 11% and compounding daily, the cost of carrying tax debt is rising sharply.

“Many businesses underestimate their tax liabilities, leading to significant debt,” says Olga Koskie, Principal at Tax Assure. She notes it’s crucial for business owners to take a proactive approach to managing their tax debts.

The ATO also wants to shed its image as a lender of last resort, which means SMEs relying on ATO payment plans should reassess their strategies, with tighter repayment terms coming into force from 1 July.

Alternative finance options may offer relief. “Working capital finance can help businesses repay debt and meet ongoing obligations – especially when revenue is lumpy,” says Campbell McCallum, Octet’s CFO. “Supplementary Trade Finance, for example, offers a revolving line of credit to pay suppliers, freeing up funds for tax.”

Tax minimisation schemes under the microscope

Many SMEs use legitimate tax strategies to manage cash flow – but under the ATO’s new compliance push, some of these approaches will face closer examination.

The ATO has flagged that strategies involving income diversion for personal use, inflated deductions, or artificial losses could fall into risky territory if not properly substantiated. “If you look at both the tax gap and the debt book, they are symptoms of a system operating less than optimally,” said the Deputy Commissioner.

Tax practitioners are also on the radar. The Tax Practitioners Board has received an additional $27.3 million in funding to investigate high-risk advisors who may be promoting overly aggressive schemes.

The ATO is clear that most businesses are doing their best to comply. But with greater scrutiny ahead, it’s a timely reminder to review any existing strategies, seek trusted advice, and ensure they align with the letter of the law.

Shadow economy in the crosshairs

The ATO is also cracking down on the “shadow economy” – cash-in-hand dealings and undeclared income. While only a handful of SMEs are believed to engage in deliberately dishonest behaviour, the ATO says the ripple effect on compliant businesses and public services is significant.

“Deliberate shadow economy behaviours contribute nearly 60% of the gross small business income tax gap – or around $11.2 billion,” Day explained. “Approximately $8.9 billion of this is associated with underreporting of income and over-claiming of deductions. The remainder is hidden wages and people operating completely outside the tax system.”

To fight back, the ATO is enhancing its anomaly detection tools – such as flagging unusually low sales for a sector – and sharing intelligence across agencies via the Shadow Economy Taskforce.

Industries most exposed to cash transactions – like construction, hospitality, cleaning, and ride-sharing – should expect closer scrutiny.

Prepare for a new era of tax enforcement

The 1 July changes mark more than the start of a new financial year – they signal a shift in how the ATO engages with small business compliance.

Audits will become more targeted, digital surveillance more sophisticated, and there will be less leniency for practices that push the boundaries of what’s acceptable. The ATO is also tightening expectations around debt management and placing greater responsibility on advisors to guide clients responsibly.

For compliant businesses, this isn’t cause for alarm, but taking steps now to review your tax position and stay informed can help you navigate the changes with confidence and avoid unnecessary disruption down the track.

Stay ahead of ATO debt while keeping cash flow intact

With the ATO stepping up enforcement and interest costs rising, SMEs can no longer afford to treat tax debt lightly.

Octet’s innovative working capital finance solutions, such as Trade Finance and Debtor Finance facilities, can help to optimise your cash flow, enabling you to efficiently repay ATO debt and minimise its impact on your business. By securing tailored finance, you can clear their ATO debts and focus on what you do best – growing your business.

Disclaimer: These comments are only 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.

What is business finance? The key to sustainable growth

Posted on January 2, 2025April 2, 2025 by Russell Walsh

For businesses planning for growth and longevity, an understanding of business finance is not just beneficial. It’s essential. This knowledge helps safeguard financial health and equip businesses to make strategic decisions, ensuring they thrive in competitive markets.

In this article, we’ll answer the following questions: What is business finance, what are common financing options, and when is it time to seek finance?

Tim Bowring, Octet’s Head of Sales, Health, also helps us explore the business financing options for the health and pharmaceutical industry. But regardless of the industry you operate in, these insights will help you to better understand the business finance options that can help your business grow.

Understanding the best finance options for your business

Business finance encompasses all types of financial activities crucial for day-to-day operations and long-term planning. It includes managing cash flow, budgeting and funding strategic initiatives.

Tim says businesses must first grasp how cash flow works when it comes to understanding finance. “Cash is king. It pays the bills and repays debt. Having a good picture of how your cash flow works will set you up to understand the most appropriate finance options available to your business.”

Tim says when looking at types of finance, there are several key factors to consider, such as:

How often will you want to draw down on the facility?
How quickly can you repay it?
Are there ongoing fees to be paid if you haven’t used the facility or drawn all of the limit?
What security do you need to get the finance?

“One common misconception is that the lowest interest rate is the most important thing,” he adds. “But the interest rate isn’t always paramount.”

When it comes to the healthcare sector, Tim helps secure funding for businesses who work with him on a range of needs, including:

paying ongoing wages for locum doctors and dentists
importing stock and equipment
manufacturing medical supplies and pharmaceuticals
covering IT service contracts.

Business financing options

There are many financing options for managing and growing a business. Many businesses rely solely on internal sources of funding (so the funds they generate as part of operations).

When seeking external sources, most business owners will be familiar with traditional forms such as bank loans and lines of credit. However, most businesses are experiencing tightening conditions, and banks can take months to approve finance applications. Banks also often seek personal security and collateral, which is a drawback for businesses that don’t have significant assets or don’t want to risk their director’s personal assets.

Equity financing is also an option for start-ups and growth-stage companies without steady cash flow. However, this dilution of ownership and long-term commitment are significant drawbacks of this type of finance.

Trade finance and debtor finance (also called invoice finance) are two other types of business financing options. Trade finance products help facilitate international and domestic transactions, mitigating risks and facilitating smooth transactions between buyers and sellers.

“If you have to pay for stock on delivery, for example, trade finance can provide you with extended terms,” says Tim. “If you have short payment terms, there are even ways to negotiate an early settlement discount with the supplier.”

Debtor finance (also called invoice finance) helps bridge cash flow gaps by allowing businesses to borrow against their receivables ledgers.

“A business that’s growing rapidly by offering competitive credit terms to its customers is likely creating a cash shortage in the business,” Tim says. “If it is buying stock that is paid at order or shipping, it is also negatively impacting the business’s cash flow. Invoice finance can unlock up to 85% of invoice values immediately, which is essential for maintaining operations and funding growth.

“In today’s challenging environment, businesses are feeling the cash flow pinch. The key to managing cash flow gaps is often intelligently tailoring the right business finance solution for your supply chain and growth requirements.”

Healthcare companies particularly rely on a smooth-flowing supply chain to support patient wellbeing and ensure the timely availability of medical and other supplies. For many businesses operating in the industry, business finance to manage cash flow is crucial to safeguard their supply chain and network.

Ready for better business finance? What you need to know

Before applying for any variety of business finance, Tim recommends preparing by having a detailed cash flow forecast and identifying any cash flow gaps. “Then, make sure you ask plenty of questions of the financier about their processes and the specific product/s to see whether they’re a suitable fit.”

Questions include:

What security is required to obtain the facilities?
What are the line or service fees?
Does the facility or platform protect my business from risk when importing from overseas?
What is the speed of transactions?
How can you support my businesses to achieve growth, whilst making informed financial decisions?

“Octet has a proven track record of supporting Australian businesses. Whatever industry you’re in, we can help you accelerate supplier payments, general cash flow and foster stronger relationships with customers and suppliers with our Debtor Finance and Trade Finance solutions.

“The Working Capital Specialists at Octet will work with you to help you better understand your cash flow, where the gaps are and what options are available for funding those gaps.”

For those in the healthcare and pharmaceutical industry, these solutions can mitigate the unique challenges faced by the industry and make the most of growth opportunities.

Discover the best business finance fit for you

For many businesses, accessing appropriate business finance is crucial to achieving sustainable growth. Octet is committed to supporting businesses through tailored financial solutions, helping them understand their cash flow and funding options and ensuring they are well-positioned to seize growth opportunities.

Whether you’re in the healthcare industry and need timely supply finance chain solutions, you’re a labour-hire company with cash tied up in unpaid invoices or a manufacturer seeking new trade opportunities, we can help. Want to know more? Get in touch with the team today.

Disclaimer: The following comments are only 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.

Factoring and invoice discounting: debtor finance solutions for cash flow management

Posted on November 30, 2024March 19, 2025 by Russell Walsh

Effective cash flow management is critical to business success. But slow-paying customers, tightening supplier conditions and inflexible bank terms can all affect cash flow. Even thriving businesses keen to capitalise on growth opportunities can face roadblocks due to cash flow fluctuations.

Many businesses are turning to debtor finance as a strategic financial solution. Whether you’re a commercial finance broker looking for the best deal for your clients or a business owner facing the daily challenge of managing cash flow, you understand the common challenges. Perhaps you’ve even explored debtor finance products such as factoring and invoice discounting but want to know more about leveraging outstanding invoices to access efficient working capital. In this article, we explore why more and more businesses are turning to this effective financial solution.

Common cash flow challenges

Businesses today face a range of cash flow challenges. Whether it’s customers delaying payments, renegotiating longer terms, or suppliers shortening or eliminating payment terms, Octet’s Director Working Capital Solutions NSW, Dan Verdon has heard it all. “The current challenging economic conditions are putting a strain on cash flow, but many business owners hesitate to address these critical issues early. That’s a mistake.”

Even thriving businesses are feeling the pinch from their traditional finance partners. “The banks and larger lenders are becoming slower and less responsive when providing loans that support business growth,” Dan says.

“Dealing with changing account managers and lengthy processing times is really frustrating for businesses in various stages of growth. Debtor finance is a reliable alternative to a traditional bank loan, offering businesses confidence in accessing working capital quickly and easily.”

Do any of these cash flow challenges affect you?

late-paying customers
restrictive bank conditions
extended payment terms.

Debtor finance could be the answer.

Take control of your cash flow with debtor finance

You might have heard the terms factoring and invoice discounting, invoice financing or invoice funding. But what do they actually mean?

They’re all broadly debtor finance solutions. Invoice factoring involves a business selling its accounts receivable to a financier, who gives them an upfront payment (up to 85% of the invoice value). The financier collects payments from the business’ clients, takes a small fee and passes the remaining funds onto the company. Invoice discounting is similar but with a critical difference — it’s the business, not the financier, that collects the debts.

The terms invoice factoring and invoice discounting are used less these days, as innovative finance providers like Octet offer more tailored debtor finance solutions.

These facilities use a major asset already in the business — the unpaid customer invoices — to sustainably meet its cash flow requirements. Debtor finance is tailored for growth and can reduce cash flow risk.

Dan advises his business clients to set up a debtor finance facility before they need it. “There is a small service fee to have the facility there, but this fee is upfront and predictable, and you only pay interest when you draw funds.”

While debtor finance helps mitigate cash flow gaps and maintain stability during volatile periods, Dan says this type of finance isn’t just for businesses facing challenges. “Debtor finance is used by many thriving, growing businesses looking for a line of credit to appropriately manage their cash flow.”

Businesses use debtor finance to:

enhance liquidity to meet operational needs and explore growth opportunities
take advantage of a tailored solution to suit their needs and cash flow cycles
streamline collections and administrative tasks
unlock potential for expansion and take on new projects
access expertise and tools for efficient credit control and debtor management.

Why brokers and businesses choose Octet for debtor finance

Dan says businesses in a range of industries access debtor finance to help grow their business. “Common industries we service include labour-hire, food and beverage, manufacturing and wholesale. But whatever industry you’re in, if you’re a B2B business, debtor finance can work for you.”

While many business owners are considering their financing options, brokers are also exploring solutions for their clients. Brokers can play a crucial role in helping businesses navigate these cash flow challenges and make informed financial decisions.

“Whether you’re a business owner, a broker or an accountant, if you’re considering debtor finance, take the time to assess the business’s financial position, cash flow forecasts and growth objectives before speaking with a financier,” explains Dan. “Business owners and brokers should partner with reputable providers. At Octet, we offer a broad range of working capital solutions tailored to each business.”

Businesses that access Debtor Finance through Octet:

get up to 85% of business invoices as a cash advance
can access funds without personal asset security
enjoy the flexibility of their debtor finance facility growing as their receivables grow
can seamlessly integrate the facility with their existing accounting software such as Xero and MYOB AccountRight.

Are you a commercial finance broker? Simply refer your client, and we’ll handle the rest.

Tailored debtor finance solutions for every business

Octet’s Debtor Finance solutions are designed for businesses to meet cash flow challenges, better manage fluctuations, capitalise on opportunities and grow. Whether you’re a business owner ready to explore their finance options or a broker who wants to see their client’s business soar, debtor finance could be the solution for you. Get in touch today.

Disclaimer: These comments are only 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.

How to improve cash flow in your business

Posted on November 12, 2024February 16, 2025 by Russell Walsh

Maintaining a healthy cash flow in an unpredictable economic climate is crucial for business resilience. Doing so ensures your business can meet its financial obligations and seize growth opportunities, but improving cash flow in business can be a challenge in many industries.

In this article, we provide practical information on business finance to improve your cash flow, helping your company not only survive but thrive in these more difficult economic conditions.

How to control cash flow in business

Cash flow is the lifeblood of any business, representing the movement of money in and out of the company.

Sam Ralton, Octet’s Director of Working Capital Solutions, VIC, TAS, SA, explains, “The importance of cash flow is the ability to pay for goods and services when they fall due. Profit is a snapshot of how much money the company’s earned after expenses, but that doesn’t mean that the cash flow is in a healthy position.”

In fact, many companies confuse high profit with good cash flow. While the two are somewhat intertwined, improving cash flow in business is much more about forward thinking, planning and strategy.

“In a growing business, cash flow management gets increasingly harder because although you may have good margins and you’re making a profit, there’s a lag in time before that money is available to you, and therefore the cash flow runway is restricted,” Sam explains.

Cash flow runways and forecasts

A cash flow runway is the period a business can operate before it runs out of money. Having a clear understanding of your cash flow runway helps you plan and ensures the business can cover its expenses for a set period.

Cash flow forecasts are equally important as they predict future cash inflows and outflows, allowing businesses to prepare for potential shortfalls. “Cash flow forecasts are a good tool and indicator of when your business can pull certain growth levers or, conversely, restrict unnecessary spend,” says Sam. “They’re essential to ensure you don’t spend money today that you may need in the near future.”

So, what are some practical strategies for managing your business cash flow opportunities and issues?

6 simple strategies for improving cash flow in business

Review pricing structures: Ensure pricing covers your costs and desired profit margins. Regularly review and adjust prices to reflect market conditions.
Increase sales: Implement more layered brand marketing strategies and explore new markets and product verticals to boost revenue.
Control expenses: Regularly review expenses to identify and cut unnecessary costs.
Faster payment collection: Implement stricter payment terms and follow up on overdue invoices promptly using appropriate accounting software.
Inventory management: Utilise technology to maintain optimal inventory levels, reduce any holding costs and free up cash.
Supply chain management: Negotiate better terms with suppliers to improve cash flow timings. Where it makes sense for your business model, early payments can sometimes create opportunities to discuss discounts with appropriate suppliers.

Explore our recent article on managing cash flow strategies to find out more.

Business cash flow solutions for working capital finance

Working capital finance products like debtor finance (also known as invoice finance) and trade finance can significantly improve cash flow.

Debtor Finance cash flow benefits

Debtor finance provides an instant cash injection by unlocking funds tied up in unpaid invoices. This liquidity helps cover operational expenses, supplier payments and even fund growth opportunities.

Sam advises, “Debtor finance can give you the cash flow required upfront. So if you need funds earlier, you’ve got the certainty of borrowing against your invoices rather than waiting for those payments to arrive under the original terms.”

Businesses that access debtor finance can execute more effective financial plans by better managing cash flow fluctuations and the uncertainty associated with extended payment terms or delayed payments.

Unlike traditional loans, debtor finance requires no personal assets as security. This flexibility allows you to access funds when you need them, without risking valuable assets.

Trade Finance cash flow benefits

Trade finance offers substantial cash flow benefits by providing a tailored line of credit that bridges the gap between purchasing and selling goods. This funding solution ensures that businesses do not have to tie up their cash flow in inventory that takes weeks to arrive, process and sell.

By introducing a financial partner, such as Octet, into the supply chain, businesses can access funds to pay suppliers immediately, whether they are local or overseas. This enables the business to maintain healthy cash flow, as they can repay the credit facility over time rather than having their working capital tied up in these often lengthy transactions.

Because you can set a competitive exchange rate for the transaction upfront, trade finance can also safeguard against currency fluctuations. This supports smoother and more predictable financial management and helps increase your business’ purchasing power.

Where to go for business cash flow solutions

Implementing effective cash flow management strategies and leveraging working capital finance products can help you confidently navigate economic uncertainties. But staying on top of business cash flow and utilising these strategies and products can be a complex exercise, even for the most experienced of operators.

That’s why seeking professional advice is often a good idea. Financial planners, accountants, commercial finance brokers and business finance experts can all provide valuable insights and tailored solutions. For earlier growth stage businesses, it’s really important to consult widely in order to find the most suitable cash flow advice for your unique business circumstances.

Keep your cash flowing

Improving cash flow is essential for business stability and growth. At Octet, we’re here to support your business at every stage, offering expertise and financial solutions tailored to your needs. Our working capital products are designed to help businesses in all industries manage cash flow effectively.

Our team can provide guidance on leveraging innovative supply chain finance solutions and tools to maintain consistent cash flow, crucial for sustaining and growing your business in these challenging conditions.

Disclaimer: These comments are only 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.

Growth finance: how flexible business finance funds progress

Posted on October 1, 2024November 27, 2024 by Russell Walsh

Businesses face many challenges, and when they strive to grow, they often find that growth hampered by inadequate funding, or working capital. So how do they evolve?

In this article, discover the factors that limit business growth and explore why using cash in the bank or profits is sometimes an unsustainable approach to funding growth. If you’re ready to progress your business, it’s time to consider growth finance and find out how tailored working capital solutions can provide the right support for sustainable growth.

Growth challenges: why most businesses fail to grow

Is your business failing to grow despite your best efforts? Business growth can be difficult at the best of times, but in an environment of global uncertainty, rising inflation and slowing economies, even the world’s most successful companies are struggling to increase revenues.

McKinsey & Company conducted a wide-reaching study of the growth and performance of the 5,000 largest public companies in the world over the past 15 years. The average revenue growth in the 10 years before COVID-19 was just 2.8% a year. Only one in eight businesses surveyed enjoyed a growth rate of more than 10% a year. The post-COVID-19 years haven’t been any easier.

Economic conditions aside, businesses also make common mistakes when trying to expand. Octet’s NSW Director of Working Capital Solutions, Dan Verdon, identifies a few factors that can hinder meaningful growth and, therefore, profits.

A need for more strategic planning. “Businesses with a well-defined and communicated strategy, which aligns with their short-, medium- and long-term goals are much more likely to be successful.”
A need for more capital. “Most businesses underestimate the level of capital required for sustainable growth.”
A need for understanding where cash flow is tied up in the business. “There are four main cash flow levers: accounts payable, accounts receivable, inventory and their own cash. Understanding how to use each of those sources and when is really important.”
Scaling too quickly. “A lot of businesses might have a good product or a good service, but they grow too rapidly and then can’t sustain it.”
A need to acquire and retain talent. “Attracting and retaining good people, especially in highly skilled roles, is a major challenge for a lot of new businesses.”

The sustainable way to grow

For the best chance of success, it’s also important to identify where to concentrate your growth efforts. McKinsey & Company has discovered that businesses give themselves a much greater chance of outperforming when they invest in three pathways for growth:

Expanding the core business by focusing on excellence in the areas in which they currently operate.
Innovating in adjacent markets by seeking ways to adapt to serve new customers.
Developing breakout businesses by identifying and exploiting new opportunities.

“Having a finance partner who can help you understand what levers to pull and unlock cashflow tied up in your business can help growth in all three areas,” says Dan.

Leveraging business growth finance for expansion

To fund their growth, many businesses set annual budgets based on previous yearly figures and use internal sources of funds, such as their profits or cash in the bank, rather than external financing, such as a loan or line of credit. However, this approach can affect profitability and hamper growth by leaving businesses without the financial flexibility to invest in innovation. While avoiding debt might seem preferable, if profits are down or cash flow slows (say, due to customers taking longer to pay their bills), a business’ ability to scale, innovate and compete effectively is seriously impacted.

As we head into 2024, the economic challenges of high inflation, rising costs and a slowing global economy will continue to put a strain on business profits. Using finance to fund expansion makes sense. “Working capital facilities can support and encourage sustainable growth,” says Dan. “They are self-liquidating, so come with fewer risks than, say, a traditional fixed-term bank loan.”

How Octet can assist with financing business growth

So what are working capital finance solutions, how do they fund expansion and how can a financier such as Octet support business growth?

A streamlined working capital solution, such as Debtor Finance, (also known as invoice finance) allows businesses to access funds tied up in unpaid invoices to accelerate cash flow. By freeing up this cash, a business can capitalise on growth opportunities. This could include importing goods from new suppliers and exploring different product lines.
Looking to expand into different regions? Octet can support your business through a Trade Finance facility. Dan explains: “Say the business is in Australia and wants to expand into another country, but they can’t get finance facilities in that country. With Octet’s facility, they can donate a portion (or all) of the limit to the overseas entity (subject to the Australian parent’s credit assessment) and then use that funding for their overseas business growth requirements.”
An Octet Term Loan allows businesses to borrow up to $2 million, with flexible terms ranging from three months to three years, to unlock additional working capital to expand operations or acquire new assets.
Octet can help your business with the process of onboarding new local or overseas suppliers. “We do the verification checks of those suppliers so the business knows they’re trading with someone who is legitimate.”
Octet tailors our flexible funding solutions to a business’ needs. “We bring all the different working capital solutions – debtor finance, trade finance, credit cards – into one smart ecosystem.”
Octet helps businesses increase the visibility of their entire supply chain, allowing them to see and act on potential blocks or gaps. Supply Chain Accelerate is a flexible funding solution that pays 100% of supplier invoices instantly, while giving businesses up to 90 days to repay.

A finance solution that grows with you

Octet has a suite of fast, flexible finance solutions we can tailor to power your business growth. Speak with our team of working capital experts today to discover what’s possible for your business.

Disclaimer: These comments are only 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.

How Octet empowered a homecare services company with working capital finance

Posted on September 19, 2024September 24, 2024 by Russell Walsh

In an industry where care is paramount, ensuring financial sustainability can often be a delicate balancing act. For an Australian homecare services company, this balancing act became increasingly challenging as the business expanded across the country. Despite a mission-driven approach to revolutionise in-home care, the company faced significant financial hurdles, particularly in managing cash flow. With the help of Octet Finance, this company was able to stabilise its operations and continue its vital work, demonstrating the critical role of working capital finance in supporting businesses in the health and aged care sectors.

Establishing the business and planning for growth

The company was established in 2016 with a vision to transform the homecare industry. Offering a broad range of in-home services — including personal care, companionship, assistive technologies, pet care, and transportation — the company aimed to help its members maintain their independence and quality of life. One of the company’s most innovative features is its technology-driven approach, which empowers members to monitor their health, track care schedules, and manage their expenditures.

However, as the business expanded rapidly across Australia into most major cities, it faced significant financial pressures. Despite a 50% increase in revenue from 2022 to 2023, the company had incurred losses for four consecutive years, reflecting the intense cash flow challenges typical in the aged care sector. Operating on a model where independent contracted carers set their own rates within suggested guidelines, the business found it difficult to balance affordability for members with fair compensation for the carers.

With the services increasing to over 35,000 in-home care activities per month – ranging from physiotherapy and nursing to lawn mowing and shopping services – one of the biggest challenges was cash flow management. The company needed to meet weekly operational expenses, but the monthly payments from the Federal Government’s Home Care Package Program created a significant cash flow gap.

Accessing working capital to ease cash flow pressures

Recognising that traditional lending solutions might not address these specific needs, the company’s commercial banking partner suggested exploring working capital finance options, particularly receivables financing, to bridge this gap.

Through the banker’s recommendation, the home care services company was introduced to Octet Finance’s Queensland Director of Working Capital Solutions, Allan Howe.

Understanding the business’s unique challenges and growth potential, Allan structured a $5 million debtor finance facility. Debtor finance, also known as invoice finance, allowed the company to unlock the value of its unpaid invoices, turning these future receivables into immediate cash. This was crucial for a business that operated on tight margins and relied on regular, timely payments to meet its obligations. With the influx of working capital, the company could cover weekly operational costs, including payments to carers and other essential expenses such as technology upkeep, marketing efforts, and administrative overheads.

“This solution provided the liquidity needed to manage weekly operational costs while waiting for the monthly government payments,” said Allan. “By smoothing out these cash flow fluctuations, the company could avoid the stress of having to defer payments to suppliers or delay critical investments in its growth.”

The impact of this working capital finance solution was immediate. With access to the necessary funds, the company could continue to pay the carers on time, maintain service quality, and support its ongoing growth. The financial flexibility provided by Octet’s facility meant that the business could focus on delivering high-quality care to its members without the constant strain of cash flow concerns.

Achieving the balance between financial stability and sustained growth

The partnership with Octet proved to be a turning point for the homecare services company.

“The stability provided by the debtor finance facility not only alleviated cash flow pressures but also allowed the business to sustain its growth across multiple regions,” explained Allan.

The availability of immediate funds allowed the business to confidently enter new markets, secure in the knowledge that it had the financial backing to support its growth initiatives. This included onboarding more carers, investing in advanced care technologies, and enhancing marketing efforts to attract new members.

The ability to consistently pay carers on time was particularly significant. In an industry where trust and reliability are paramount, ensuring that these independent contractors were compensated promptly helped maintain strong relationships and a high standard of care for members. This reliability, supported by the working capital facility, became a competitive advantage, allowing the company to attract and retain top-tier carers, further enhancing the quality of services provided.

The collaboration between the banker, Octet, and the homecare services company demonstrates how the right working capital finance solution can empower businesses to navigate financial challenges, sustain growth, and continue their mission-driven work. For this Australian homecare services company, Octet provided not just a financial solution, but a lifeline that enabled them to focus on what they do best — caring for their members.

Grow your business with Octet

Via our Referral Partner Program, Octet empowers businesses across a range of industries, including healthcare, labour hire and transport, offering innovative Debtor Finance and Trade Finance working capital solutions.

Speak to our team of working capital specialists to see how we can power your business growth today.

Disclaimer: These comments are only 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.

Unlocking opportunity: business finance options every broker needs to understand

Posted on September 1, 2024December 11, 2024 by Russell Walsh

Want to better support your SME clients? Managing cash flow is an SME’s number one priority — cash flow gaps can significantly affect operations and hamper growth. As a commercial finance broker, helping your SME clients identify, measure and bridge cash flow gaps will set you apart.

In this article, we’ll explore some key strategies and tips for managing cash flow. So let’s get started with some insights that brokers can use to proactively suggest tailored financial solutions that help to address cash flow challenges and drive business success for their clients.

Identifying cash flow gaps for your SME clients

Clearly, in order for you to offer solutions to your clients, you have to know what the key issues and opportunities are. Identifying cash flow or finance gaps and adding value to your existing service can really help strengthen your client relationships. And it starts by simply getting curious.

Dan Verdon, Octet’s NSW Director of Working Capital Solutions, says there are some simple questions you can ask your SME clients to identify any cash flow gaps:

Do you want to grow your business, or have you identified growth opportunities, but you can’t make it happen? “If the client is finding it difficult to grow to the next level, it might be because they don’t have the right finance in place,” says Dan. “Innovative working capital solutions can really help here.”
Are you finding you must turn away new business? “The client might tell you that they’re having to say no to orders or sales because they don’t have the working capital or the cash flow to actually service that customer or take care of those additional orders.”
Are your customers taking a long time to pay their invoices? “We often hear businesses complain that some of their customers take a long time to pay. They might be big businesses and good payers, but they take up to 70 days to pay. If you ask your SME clients what their average debt turn is and they say it’s beyond 30 days, that can cause cash flow issues.”

Business finance options

You’ve identified your client’s cash flow gaps and think a working capital solution might be the answer. So, is using debtor finance the best solution or is a trade finance facility the way to go? Could these solutions actually work together to help accelerate cash flow? Ask yourself, what is the best fit for my SME client and their unique supply chain and business requirements?

The good news for you is that there are solutions that can address these cash flow gaps. Today’s businesses have a range of finance products at their disposal, but beyond traditional forms of credit such as bank loans and credit cards, they might not fully realise their options.

Octet provides working capital solutions for SMEs across a range of industries. These solutions help improve cash flow and ensure the smooth operation of a business.

To explore growth opportunities

Debtor finance, also known as invoice financing, is a solution for businesses to access funds tied up in their receivables ledger without the need to use personal security or other collateral. It provides quick access to cash by leveraging unpaid invoices as an immediate cash advance.

A debtor finance facility can provide a robust solution where your client has a good business but encounters cash flow issues due to slow B2B payers.

With a debtor finance product, the financier will effectively lend against the business’ accounts receivable ledger and provide quick access to cash, bridging the gap between when invoices are raised and when they are paid. There’s generally no need for personal security or collateral.

When Skillforce Recruitment needed to overcome cash flow challenges to rapidly scale their operations, traditional financing options couldn’t provide the flexibility they required. The business came to Octet for a range of solutions, including a Debtor Finance facility that ensured predictable cash flow levels to meet payroll, manage operational costs, and seize growth opportunities.

“Octet’s got a proven history of facilitating growth for businesses,” says Dan. “Skillforce is a great example of that.”

To increase purchasing power

A trade finance facility could also be what the business is seeking. This revolving line of credit allows businesses to pay their suppliers quickly, mitigating some of the financial trade risks and allowing them to keep their supply chain moving smoothly. It also allows businesses to explore new trade opportunities.

“When you think of trade finance, many people immediately think of paying overseas suppliers. But it’s just as effective for paying domestic suppliers,” says Dan.

With trade finance, the financier pays suppliers immediately (which tends to keep them happy) and gives the business up to 120 days to repay.

Octet’s trade finance facility was the perfect solution for wellness retailer Go Vita. The business was increasing its number of suppliers and opening new stores but didn’t want its cash flow tied up in the process. The Octet facility allowed Go Vita to pay suppliers without delay while keeping its supply chain moving and the business growing.

Partner with Octet to power your SME clients

So, you’ve established that your client is interested in a working capital solution like a trade or debtor finance facility, but what’s next? Think Octet.

Unlocking a world of business possibilities since 2008, we have the experience to power a range of businesses across many industries. Our clients trust us to handle more than $4 billion in supply chain transactions every year.
We make it easy for commercial finance brokers, especially those who don’t work with these types of products every day. We structure the facility, help promote it to your clients, answer their questions whilst your brokerage reaps the rewards. Learn more about our Referral Partner Program, including the exclusive Qantas Business Rewards referral offer.
Our business clients choose Octet, and brokers refer their clients to us because we provide simple, fair and fast financing solutions. For example, with our streamlined Supply Chain Platform, businesses can track and manage every stage of their supply chain process, improving transparency and security for all parties.
We know your relationships are important, and we will keep you updated so you can continue to leverage the positive relationships you’ve built with your clients. Partnering with an established financier like Octet helps to cement your reputation and credibility.
The process is straightforward. Simply refer your client, and we handle the rest. After the initial meeting, you provide the business’ financials for our review. We’ll then walk your client through the recommended product and provide an indicative offer where appropriate. Once the offer is accepted, we settle the deal and get started. Your clients can then track, validate and authorise every stage of their transaction via our intuitive supply chain platform, enjoying all the benefits of having accelerated business cash flow.

Discover how to partner with Octet today

Octet partners with commercial finance brokers nationwide to help them empower their business clients. Do you have clients who could benefit from smarter working capital solutions? Get in touch with us today to discover how we can power your SME clients’ growth.

Disclaimer: These comments are only 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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