Broker uptake a key driver
Grow Finance has experienced a record monthly uplift in trade and invoice financing, as businesses increasingly seek funding to purchase stock and offset supply chain backlogs to support growth.
The non-bank business lender, which provides asset finance and working capital solutions to small and medium sized businesses, has reported a 57% month-on-month rise (June to July) in its trade and asset finance invoice facilities.
Grow Finance attributes the monthly spike in trade and invoice financing structures to an increase in broker uptake and strong market conditions driving demand.
Grow Finance co-CEO David Verschoor (pictured above right) said the company had experienced a “notable shift” in businesses being more receptive to trade and invoice finance to support their cash conversion cycle.
Demand was compounded by the fact that facilities were linked to the specific asset being financed, as opposed to the requirement of a tangible security (required by other financing facilities), he said.
“Consequently, more and more businesses are adopting the debt structures as they provide much more flexibility and clarity when managing their working capital finance,” Verschoor said.
Health and personal care services, transport and logistics, manufacturing and fast-moving consumable products (including food), were among the growth sectors for the two products, he said.
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Providing an example of how businesses were using trade finance, Grow Finance co-CEO Greg Woszczalski (pictured above left) said Grow Finance recently had a retailer that imports stock from an overseas manufacturer and was required to pay for the goods upon shipment.
“They’re now utilising trade finance to acquire and hold inventory until it is liquidated via sales in lieu of supplier credit,” Woszczalski said.
Many businesses used invoice finance to smooth out cash-flow gaps from slow payers, he said. Some customers required extended credit terms to support business growth.
“The appeal is that as the turnover increases, so does the invoice finance facility as it complements each other being part of the security on offer,” Woszczalski said.
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Grow Finance said it expected its trade finance and invoice finance facilities to continue to escalate as COVID-19 and global macro-economic factors have shown the importance to manage working capital and access alternative financing options to mitigate challenges and headwinds.
“Growth in both sectors will be sustained by supporting brokers via national BDM presence, progressive team extension, product enhancements and careful credit management,” Verschoor said.
In recognition of the company’s rapid growth, Grow Finance ranked first in the 2021 Australian Financial Review (AFR) Fast 100 list. The lender ranked eighth in the 2022 Financial Times Asia-Pacific High Growth Companies 2022, based on revenue growth between 2017 and 2020.
