Octet secures increased $300m warehouse funding facility to support growing demand for supply chain finance

Sydney, 16 September 2021: Innovative supply chain finance and technology provider Octet today announced it had secured a $300 million warehouse facility via a fund managed by MA Financial Group (formerly Moelis Australia) and at least two other major Australian financial institutions, enabling it to meet growing demand amongst Australian businesses for alternate funding solutions, including trade and receivables finance.

The new facility is significantly larger than Octet’s previous warehouse funding lines and reflects growing interest from Australian corporates and SMEs alike in using supply chain finance as a tool for working capital management. Demand for these financing approaches is accelerating, from both domestic and international suppliers, particularly pureplay ecommerce firms, finding that traditional lenders will not give them funding to ride out economic disruption or invest in opportunities because they can’t offer physical securities. At the same time, regulatory initiatives such as the Payment Times Reporting Framework will likely spur additional funding demand from larger companies to accelerate cash flow.

Octet is one of the largest full-service supply chain financiers for SMEs in Australia, with more than 200,000 users in 72 countries now transacting on its innovative and secure platform. Octet supported more than $3 billion in supply-chain and trade finance transactions in FY21, recording a 40% YoY growth in transaction volumes, excelling through the COVID-19 effected period.

Octet Chief Commercial Officer, Brett Isenberg, said the new major funding facility would support growth and client funding flexibility in Octet’s trade and receivables financing portfolio and continued innovation in Octet’s market-leading supply chain technology.

“Managing cashflow has always been a key issue for businesses, particularly SMEs, but financing via the supply chain, as a means for releasing cash and managing working capital, has historically been poorly understood. Now, interest in Octet’s supply chain finance solutions is growing rapidly because companies can see that on cost, speed and service terms, our finance solutions stack up very favourably against traditional alternatives,” said Mr Isenberg.

“COVID accelerated the already exponential growth of ecommerce by forcing more businesses and consumers to move online. With the backing of MA Financial Group and other major financial institutions, Octet’s expanded facility positions us strongly to continue to power Australian businesses with their cash flow and growth ambitions.” he said.

Octet’s finance solutions include Trade Finance, for companies seeking to procure both internationally and locally from suppliers for goods and services prior to shipping; Supply Chain Finance options enabling established buyers of goods and services to pay their suppliers earlier or to access discounts; and Debtor or Receivables Finance, typically accessed by businesses across a wide range of industries as an advance on invoices payable.

Octet also offers a secure, full-service platform for suppliers and purchasers to transact, with advanced payment and real-time FX functionality and in-built protection against fraud and money laundering.

The company plans to launch an Octet-branded virtual corporate card within the next year.

Commenting on the warehouse funding agreement, MA Financial Group Investment Manager, Guy Kaufman said: “We are delighted to partner with Octet in this important initiative, which supports the working capital needs and growth ambitions of Australian businesses by offering innovative funding solutions. In light of current conditions, this is something that is arguably now more important than ever.”

The Payment Times Reporting Framework was introduced by the Federal Government in 2020. The Framework requires all companies with more than $100m in annual turnover to disclose the time taken on average to pay their suppliers’ invoices. The first report arising from the Framework, covering FY21, will be published on 30 September this year.

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Media contact:
Iain Waterman
Sefiani Communications
Iwaterman@sefiani.com.au
0401 719 935

About Octet

Australia’s leading supply chain financier, Octet specialises in providing working capital and payments solutions to Australian business’ and their global and local trading partners.

Established in 2008, Octet’s vision is to connect and grow the world’s businesses via simpler, fairer and faster supply chain finance solutions.

Trade payments data healthy… but for how long?

SYDNEY, 11 August 2021 — Leading commercial credit bureau CreditorWatch has released its Business Risk Review for July, which paints a positive view of credit risk indicators across Australia with businesses in a good position to face the challenges of the current lockdowns.

As expected, the research shows the number of defaults, court actions and voluntary administrations all fell in July which is in line with what we saw through 2020. Given the impact current lockdowns and restrictions are likely to have, and the reduced stimulus and insolvency protections compared to 2020, it’s expected these figures will deteriorate in the short term, especially for sectors such as hospitality and accommodation, and retail.

We are confronting increasingly challenging times from a strong starting point,” said Mr Patrick Coghlan, CEO CreditorWatch.

“This will hopefully allow the economy to return to growth when lockdowns and other restrictions end,” he said.

This is also the Reserve Bank of Australia’s (RBA’s) view. Governor Philip Lowe noted in the August monetary policy statement the economy had substantial momentum before the lockdowns and the economy should bounce back once COVID restrictions are relaxed.

Nevertheless, Mr Lowe said, “The economic outlook for the coming months is uncertain and depends upon the evolution of the health situation and the containment measures”. However, the RBA still expects strong economic growth of 4.0 per cent in 2022, dropping to 2.5 per cent in 2023.

The recent retail figures are a good indication of the early impact of lockdowns on the economy, with Australian Bureau of Statistics’ figures for July showing retail sales were down by 1.8 per cent in June, although up by 1.3 per cent for the June quarter. Clothing, footwear, department stores and cafés were the hardest hit of the retail sectors.

Jobs figures also tell the emerging story of a deteriorating economy thanks to COVID lockdowns. Payrolls dropped by 2.4 per cent across Australia for the two weeks ending 17 July and by 4.4 per cent In NSW. These figures will continue to decline as long as lockdowns are in place.

Expect other economic data points to also weaken while COVID restrictions are in place, before improving once COVID outbreaks are contained and vaccination rates improve.

Defaults drop

The number of defaults fell by 20 per cent in July 2021 compared to June, although this data is not seasonally adjusted. This is an encouraging result after the number of defaults rose in May and June, with defaults rising by five per cent over the three months to July 2021. A further rise in July was expected as numbers ultimately have to return to pre-COVID levels however, given current COVID restrictions, it’s likely defaults will stagnate or drop again over the coming lockdown months.

Defaults are a leading indicator of economic conditions. It will be important to closely watch these figures in coming months given the escalating COVID crisis,” said Mr Harley Dale, Chief Economist, CreditorWatch.

“We expect the Australian economy to contract in the September 2021 quarter, before returning to growth once vaccination rates rise and the economy opens up,” he added.

The number of defaults fell by 31 per cent when compared to the three months to July 2020. Credit defaults have now fallen on an annual basis for 14 consecutive months.

Credit enquiries buoyant 

In non-seasonally adjusted terms, credit enquiries jumped by 12.5 per cent in July 2021. A clear upward trend has been in place since the beginning of 2021. It is an encouraging start to the 2021/22 financial year.

Enquires fell by five per cent over the three months to July 2021. This reflects a sharp spike in March this year, impacting ongoing results. Credit enquiries rose by 26 per cent compared to the three months to July 2020 and have now risen on an annual basis for 10 consecutive months. For the six months to July 2021, credit enquiries were up by 35 per cent when compared to the same period in 2020.

Court cases continue to fall

The number of court cases continues to trend down, with numbers dropping since March 2020.

On an annual basis, the number of court cases fell by 38 per cent in July 2021, the 16th month of consecutive decline. Over the three months to July this year, courts cases were down by 31 per cent compared to the equivalent period last year.

External administrations down 

The number of external administrations fell by nearly 6 per cent in July 2021, although this number is not seasonally adjusted.

Administrations were up by 15 per cent over the three months to July 2021, compared to the three months to April 2021. The fall in the month of July this year was a good result, but there is a high risk this trend won’t be sustained given current COVID challenges. If we look at a 12-month moving average, external administrations through to July 2021 are 41 per cent lower than the peak in December 2019.

The Australian Securities and Investments Commission’s (ASIC’s) data reflects a similar trend. According to its figures, provisional moving rolling data for external administrations through to mid-July reveals a decline of 41 per cent compared to the same period in 2020.

Provisional monthly data through to 18 July shows the number of external administrations fell by 12 per cent relative to the same timeframe in 2020.

ASIC’s 12-month rolling average through to 18 July highlights a decline across all states and territories. This is largely consistent with the latest Business Risk Review results for July. CreditorWatch data is not based on a rolling average, but it is worth noting based on our analysis, that the exception was Queensland, where external administrations were up by seven per cent compared to the three months to July 2020.

A key reason insolvencies are still so low has been a benign approach to debtors who cannot meet their obligations from the two biggest creditors in Australia, the Australian Taxation Office (ATO) and the banks. It’s expected these creditors will become more vigilant in pursuing debtors who cannot pay when economic conditions return to more normal settings.

Outlook 

With risks from COVID lockdowns escalating, it’s expected most measures on which the Business Risk Review reports will remain flat before deteriorating after lockdowns and when vaccination rates rise.

Media Contacts:

Hayley Schubert

Sling & Stone

hayleyschubert@slingstone.com

0431 651 418

Mitchy Koper

GM Communications and Marketing, CreditorWatch

mitchy.koper@creditorwatch.com.au

0417 771 778

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