The experience of national ink distributor Xscite Inks Pty Ltd demonstrates the flexibility a debtor finance facility can provide when sales increase and the business enters a growth phase.
“If I request funds, they are in my bank account within hours.” – These words are music to the ears of any small business owner.
For David Booth, director of Melbourne business Xscite Inks, this is exactly what is provided by his debtor finance funding with Scottish Pacific.
Xscite Inks supplies HP inks and cleaning fluids for Large Format Digital Printers, and is Australia’s sole supplier of the ink, which is used on billboards, real estate and public transport posters and large point of sale posters at shopping centres.
David started the business in 2011, purchasing a $750,000 inventory, along with an installed base of customers, from the previous owner.
He had worked with Hewlett-Packard for 27 years before moving to another technology business that was bought by venture capitalists, who planned to shut down the division David was running.
“My division was not core to their business strategy so they asked if I wanted to buy it, on the proviso I took all existing inventory. My co-worker came with me to start Xscite Inks,” he says.
“After so many years in business, this was the first time I had run my own business. It has highs, and stresses, that are totally different to when you are working for someone else.
“I negotiated extended trade terms but needed cash to finance the large inventory purchase. I could see the payment date approaching and I was pretty worried about the impact that large outgoing would have on the business.
“My accountant, who helped me set up the business, explained that I had two options: get a bank loan and put my house on the line (I was not keen on this option), or debtor finance.”
David didn’t know much about debtor finance but his accountant explained how it worked, and recommended two providers, one of whom was Scottish Pacific.
“I met with Scottish Pacific and explained how we had an installed base of customers and guaranteed volume, and they were very supportive, setting up the financial model for us.
Initially Scottish Pacific offered David a $500,000 facility, which has recently been expanded to $750,000 to cater for the 25 percent growth in the business over the past year.
“We are in a very niche area – I think we are the only ones in Australia who just distribute this ink (there are some who sell the ink and do printer repairs),” David says.
“Yet we really feel Scottish Pacific understands our niche business. They also offer significant benefits that far outweigh the additional costs of using debtor finance.
“The systems and processes they have in place for invoicing and payment make this side of the business, which could otherwise be quite painful, extremely quick and effortless for us.”
“For a growing business that doesn’t have the cash reserves to meet demands, debtor finance is an excellent funding model,” according to David.
It’s flexible, you can quickly vary the amount borrowed when and if you need it, and you get immediate access to funds.”
Xscite Inks Pty Ltd sells and distributes HP’s range of inks and cleaning fluids for Large Format Digital printers, with a comprehensive inventory of all inks and quick delivery for customers. www.xscite.com.au