MOTHERLY Group is a recent start up company that sought to achieve 200% growth in its first year, thanks to an ambitious business plan and the support of an innovative and flexible finance facility from Bibby Financial Services .
Brisbane-based owners Kylie and Andrew Cardwell have doubled their company's $1.5 million turnover in their first year following the extraordinary success of their flagship product, a range of healthy and convenient frozen baby foods labelled Motherly Cubes.
The concept had all the hallmarks of a commercial success story, however it took the flexibility, innovativeness and support of the factoring facility offered by Bibby for the concept to take off and for the company to meet its first challenge of supplying over 300 supermarkets, including major retailers Coles and Woolworths.
"In March (2004), prior to stepping into the big league, our turnover was negligible. Everything was riding on getting our product accepted by the big chains," explained Andrew.
"I knew that once we signed on with major retailers our small operation would be catapulted into the big league.
"With upwards of 300 supermarkets demanding our product, we really needed access to immediate cash to source our ingredients, pay our staff and meet our overheads," said Andrew.
"When developing the business plan, factoring was always top of mind as a finance option."
Factoring is an innovative and flexible cash flow solution being used by an increasing number of Australian SMEs, which allows a business access to up to 90% of the value of its unpaid invoices within 24 hours subject to credit approval, even if those invoices are not due for 60 days.
When the customer pays, the remaining 10% (minus an administrative fee) is transferred from Bibby back to the business.
This shortening of the cash flow cycle accelerates cash flow and enables the business to fund new sales or expansion immediately following invoicing instead of waiting up to 60 days or longer for payment, and without the need for taking on additional debt, sacrificing equity in the business or offering personal property as security.
As the funding is linked to sales, access to cash is aligned with the business' performance and growth so the facility can also be used to minimise the risks the business and its owners would be exposed to in using more traditional financing, with the success of the venture still unknown.
Bibby Financial Services offers innovative solutions that traditional finance institutions cannot always provide to small and medium-sized businesses in the often uncertain start-up phase.
Businesses in this position are completely driven by cash flow because of their limited asset base that restricts their access to additional cash from traditional lenders, as was the case with the Motherly Group.
They needed an innovative finance solution, customised to their business, industry and situation, to provide the access to fast cash needed to keep pace with demand and maximise growth while the business was running hot.
"Without the services offered by Bibby we really would not have been able to sustain the production rates necessary to fulfill the initial order, or be in a position to accept later approaches from Metcash-IGA, Foodland and FAL's Action Supermarket chain," explained Andrew.
The Motherly Group has since broadened their product range and extended their production and market reach into the lucrative Asia-Pacific and US markets.
"If we intend to honour substantial orders, pitch for new opportunities and ultimately grow, we need the cashflow certainty provided by Bibby," said Andrew.