Bay of Plenty Business News July/August 2017

26 BAY OF PLENTY BUSINESS NEWS July/August 2017
A new model for improving
business cash flow
Apricity was founded to ease the financial
stress of small to medium-sized businesses
suffering from the increasing tendency of
large debtors to push payment terms out
to the max.
Created in Australia by
Linden Toll and Andrew
Meakin in 2013, the
Apricity invoice funding
model was launched earlier
this year in New Zealand by
former senior bankers Craig
Urquhart, the New Zealand
chief executive, and Alan
Hewitt, the general manager.
Client testimonials
In the following Q&A, Hewitt
outlines how Apricity differs
from other invoice factoring
approaches.
Q: Why is prompt invoice payment
increasingly important
to SMEs?
A: Cash flow facilitates
growth and there is a lot of
evidence that companies that
aren’t growing and accepting
change, won’t survive. SMEs
need strong and consistent
cash flow to supplement
working capital. Traditionally
banks will secure working capital
overdrafts and term debt
against business owners’ residential
property, and a General
Security Agreement over all
company assets.
But in the case of receivables,
banks will, as a rule,
discount full value, so those
assets are heavily weighted
downwards. Most large entities
seek to enhance shareholder
returns and reduce debt, and
“The business I work for has used Apricity for the last 2-3 months to assist
with cashflow. The arrangement with Apricity was relatively straight forward
to negotiate, and the processes are easy to use. There is great support when
needed both from the Australian team and Alan Hewitt (the NZ General Manager).”
– Finance Manager, Transport Company, New Zealand
a frequently used method of
achieving this is to extend supplier
payment terms, i.e. obtain
free credit at the supplier’s
expense. Typically payment
terms have grown from 15-30
days, to 60 days and 90 days -
as in the recently reported case
of Fonterra. That organisation
is not alone. The impact of that
on smaller companies can be
devastating. To have payment
pushed out two to three months
makes a big hole in cash flow
when these SMEs have their
own commitments to meet.
There is also a trickle-down
impact on the whole supply
chain. Apricity can bridge that
gap and improve supply chain
relationships.
Q: Why did you decide to
bring the Apricity model to
New Zealand?
A: In Australia, debt funding is
a $64 billion industry. A simple
calculation as a percentage of
GDP, by comparison in NZ
it should arguably be an $8
billion business, but we know
that it is nowhere near that. It
was clear to Craig and I, from
our own experience as former
bankers, that the market was
clearly underserviced and that
there was an opportunity to
introduce a new product.
What really appealed to us
was that the Apricity offering
is different from existing providers
in New Zealand where
there was a tendency to perceive
debtor funding agencies
as being something of a lender
of last resort, whereas in
Australia they are seen as an
acceptable alternative funding
source.
Q: How does Apricity’s
approach differ?
A: We do not have a lengthy
and onerous contract, with hidden
costs. Our fee structure
is simple and transparent. We
also do not lock customers in;
they use Apricity for as much
or as little as they need to; the
choice is theirs.
We do not take security,
Alan Hewitt
and in doing so ensure that the
existing banking relationship
can remain intact.
We have minimal contact
with our client’s debtors, we
allow them to retain and continue
the business relationship
they have; you could argue
we enhance that relationship
by our clients not having to
chase their customers for early
payment.
We pay up to 95 percent of
invoice value within 48 hours
(often quicker), of the invoice
being uploaded to our system.
Our customers have the
choice to select which invoices
they want us to pay; we allow
them to manage their cashflow
and working capital.
Q: How do you ensure your
own security?
A: This is part of our IP;
we take an assignment of
the invoices issued to High
Creditworthy Debtors
(HCD’s). We only fund invoices
to HCD’s which can be -
listed companies or very large
and established enterprises,
government departments and
agencies, health boards, local
government authorities and
similar organisations.
Our credit and administration
function is centralized in
Australia and they are constantly
monitoring, evaluating,
and reviewing debtor creditworthiness
and quality.
Q: Where are you based and
how are you approaching the
New Zealand market?
A: Our NZ headquarters is
in Auckland, but we strongly
believe in the strength of
New Zealand’s regional businesses.
We are constantly out
talking to financial intermediaries
and prospective clients,
and our very first two New
Zealand customers came out
of Tauranga.
Our credo is that SME
activity is the true engine of
economic growth and we need
to do everything we can to
ensure that these businesses
thrive and grow.
“Cash flow is critical for us to be able to pay our creditors and our wages. In our
business, we can make a big upfront payment and then not get paid ourselves for
months.…We just wouldn’t be able to exist without Apricity. It allows us to pay our
creditors and our wages on time – it takes the lumpiness out of our cash flow.
“The best thing about it is you don’t have to offer up your house as security. You’re
not tied to it. It was a great decision for us. It allowed us to adapt to the market,
and to continue on doing what we were doing.”
– CEO, Construction and Engineering Services, NSW
“Before we started with Apricity, I was spending so much of my time chasing
money. When you have suppliers asking where their money is, and you
haven’t been paid from your customers, it gets very tough.
“Apricity was a great solution for us. They have got really affordable
fees – cheaper than a bank – and they understand your business.
When you deal with a bank, you speak to someone at a counter who
doesn’t know your business; you fill out a form and it gets sent on to
someone else who doesn’t know your business.
“Unlike a bank, I can call Apricity and have my invoices paid is as little
as two hours. It means I can look to the future.”
– Award winning Pie Maker, NSW
“As a business, we don’t like to have a lot of debt on our balance sheet,
and Apricity provides a great way around this. Their product means they
are on call when and if we need them… By bringing our invoice payments
forward, we can smooth out our cash flows when it suits us to do so
“Apricity takes out the challenge of cash flow during our peak periods.
It’s a great financial resource for us to drawn on when we need to.”
– CEO, Production Company, Victoria
Receive
50% off your
application fee
when you fund your first transaction.
Call us to learn how we can help deliver your business
smoother cashflow and stronger business.
Mention this ad to receive 50% off your application
fee when you fund your first transaction.
Call 0800 95 95 95