The Rise of Domestic Production Financing & Fortress Australia

The Rise of Domestic Production Financing & Fortress Australia

A sudden change in market conditions and a shift to “”Fortress Australia”” thinking is resulting in a surge in domestic production to meet demand.

Australian producers are struggling to keep pace with demand. As consumers switch to local produce and Australian made products, domestic production and procurement have skyrocketed.

This surge in demand is creating a cash flow problem, albeit an excellent problem to have it, payment terms with corporates can quickly turn into a gapping cash flow hole to meet upfront supplier payments and OpEx.

Enter Domestic Production Financing

Production Finance is utilised to procure the necessary components or raw materials to “make” or “build” a finished product either in their facility or using sub-contractors.

This extends across Agri-Business as demand for livestock, surging prices and drought-breaking rain has seen unprecedented levels of buying activity for farmers.

Production financing rapidly employs 100% of the transaction capital to get goods made and is a cash-flow creation tool for companies that make, buy and sell products.

Businesses avoid bringing in a new equity partner to solve short term cash-flow problems or pairing long term debt to short term needs, resulting in paying for capital well after the demand.

It’s not uncommon that you might struggle to get support from your bank, existing factoring provider or venture partners.

Here are some typical scenarios where you’ll get roadblocks:

  • You’ve maxed out your balance sheet already
  • Funds far exceed existing assets traditionally lent against
  • You’re a startup
  • You’re not producing healthy profits yet
  • Your current lender has reached their comfort level
  • You’ve had a rough trading year, taken a few “hits.”
  • Existing lenders don’t want to take the “performance” risk

Whether you use a third-party factory or produce goods yourself production finance can provide the capital to secure profitable orders to meet your growing demand.

Need help funding inventory or production costs? Ask Stak.

.   .   .

We regularly share our thoughts on trade finance, lending, procurement, logistics, and international trading.

Stak provides working capital to clients that sell to some of the largest buyers in Australia & overseas.

Leave a Reply

Your email address will not be published. Required fields are marked *

Up Next:

Intercreditor Agreements and DOP's: The Factors Secret to Effective Collaboration

Intercreditor Agreements and DOP's: The Factors Secret to Effective Collaboration