How many banks are operating in Australia? You’re probably thinking there are at most 20 banks. You would be very wrong. There are actually thousands, possibly hundreds of thousands of banks in Australia. ‘How is this so?’ I hear you ask. Well, every time your customer makes you wait for an invoice payment, you have effectively become a banker - presumably without the six-figure bonus or Ferrari.
“Everybody has a plan until they get punched in the face.” - Mike Tyson
Have you ever noticed how your budgeted projections don't look anything like your historical numbers? Projections tend to resemble a calm blue ocean however historical numbers look more like a tumultuous pot of troubled energy. The world is a volatile place, especially for small businesses. Despite this, we have a tendency to create smooth forecasts that rarely reflect reality. This is partly why SMEs frequently get blindsided by cash flow problems.
"I have enough money” - said no business ever
A journalist recently told me that if he made a dollar for every pitch he heard on “the next Xero” or “the next disruptive technology that is going to disrupt business forever” he would be a rich man. It’s no secret that business processes are being “disrupted” (excuse the cliché) by technology and capital is pouring into the space at a rapid clip - if you dont believe me just ask your Uber driver where he is investing his money.
“What the hell is reverse factoring?
- Skippr Client
“The good part, William, is that no matter whether our clients make money or lose money, Duke & Duke get the commissions”
Randolf Duke, Trading Places
Factoring has experienced somewhat of a renaissance in the last decade. Since 2006 annual factoring volume has increased from A$3.4 billion to A$5.3 billion. Growth in factoring volume in Australia was driven to a large extent by three of the major banks scaling back their invoice discounting divisions during the 2008-2010 period, which provided factoring companies with a once in a lifetime opportunity. In our view the traditional factoring model has benefitted from being in the right place at the right time.
“A rising tide floats all boats but it’s only when the tide goes out that we can see who was swimming naked” - Warren Buffett
What if I were to tell you that many of the roles performed by the CFO and their team could largely be automated. Is that something you might be interested in? Imagine if monotonous tasks like accounts payable processing, chasing customers for payment and paying tax were automated. Well imagine no more.