Seasonal demand can fluctuate throughout the year, which can make it difficult to maintain cashflow for any business.
Any seasonal demand that requires significant capital outlays and, in some cases, delayed receipt of revenue can lead to serious cashflow problems, particularly ensuring suppliers are paid on time. This only gets harder when existing finance agreements are unable to accommodate anticipated and unforeseen changes in demand.
For example, an Australian confectionery manufacturer and distributor, whose busiest time of the year is the lead up to Christmas, starts manufacture in late August. To counter the risk of outlaying considerable resources and carrying a large debtor ledger, the confectionery manufacturing company based in Melbourne turned to AddCash Finance as the working capital option best suited to the nature of its business.
AddCash Finance was able to advise the correct solution for the Managing Director to provide customer invoice finance (also known as debtor finance) for its business that services major retail chains and specialty shops nationally. The confectionery manufacturer simply sent a copy of the invoices to AddCash Finance who then funded 80% of the unpaid invoices; turning it into cash within 24 hours. They could then draw down on the fund pool when it was needed. Once the invoice has fully been paid, AddCash Finance paid the remaining 20% less a fee, straight away.
“Customer invoice finance provides a flexible source of finance by allowing us to unlock the funds tied up in unpaid invoices – leading to an immediate injection of cash. This meant keeping momentum in the business leading up to and during the busy Christmas period when extra staff and resources were needed. In the meantime, we were able to immediately pay recruitment companies who supply personnel, honour our supplier contracts and met fixed overheads such as rent. We could also purchase the raw material we needed and boost marketing activity to meet demand, that otherwise would have been delayed by many weeks without AddCash providing access to cash earlier in the season.” said the Managing Director of the Australian confectionery manufacturer and distributor.
AddCash Finance helps reduce headaches in business processes for all types of businesses who operate on invoicing systems. If your company has a slow period throughout the year and you don’t have an answer to your problem, talk to us at AddCash Finance to see what solution is right for you.