How working capital funding helped two manufacturers to grow their business

Fintech lender Banjo Loans offers small businesses cutting edge technology with a personal approach to business, CEO Guy Callaghan tells Manufacturers’ Monthly.

As one of the leading SME fintech alternative lenders in Australia, Banjo Loans has been helping to power small and medium businesses across the nation for over 6 years. Banjo’s clients include a wide range of businesses and industries.

Banjo CEO Guy Callaghan said Banjo is a fintech with a difference.

“We combine the rapid data analysis and technology you’d expect from a fintech, with an old school personalised relationship approach that is quite rare in our sector,” he said. “Our clients get the best of both worlds.”

“More than 80 per cent of our clients come back to Banjo to reborrow. Those small and medium enterprises (SMEs) continue to look to us to help them grow and build their enterprise.”

Here’s how Banjo’s more holistic view helped to tailor better loans for a food manufacturer’s and a digital media manufacturer’s cashflow requirements.

Cooee Foods is a manufacturer of specialist foods like condiments, packaged meats, and plant-based (vegan) foods such as vegan sausages.   Founder and CEO Chris Egan and his multicultural staff of 80 are based at a plant in Moorabbin, Victoria. Cooee’s 8-year research & development (R&D) program is partly funded by the federal government, based on them manufacturing plant-based foods, and exporting their Redsun Pho product to Vietnam. Redsun products are also sold to Vietnamese restaurants in Australia.

In 2020 Cooee secured a deal with Coles to sell several products in their plant-based, condiment and Redsun range.

How Banjo helped

Because there was so much investment going into R&D, Cooee was operating with limited cashflow.  The major bank they previously had a relationship with was only concerned with past performance and wouldn’t support Cooee’s plans based on their current position.  Banjo took a more holistic view, including the company’s story and the research and development work they’d been doing.

The Banjo team noted that, based on new supplier agreements including Coles, the company was forecast to have a $4.8 million increase in turnover.  A member of the Banjo team visited the Cooee Foods factory to meet the directors and see the production facilities.  Banjo was able to review the application based on forward looking cashflow projections incorporating Cooee’s new sales agreements.

Terms were agreed for an 18-month loan, tailored to Cooee’s cashflow requirements.

Now in a strong cash position, CEO Chris Egan is delighted with the outcome.

“Banjo is more nimble and have the technology that you’d expect from a fintech, but they’re also highly professional and focused on establishing a relationship,” he said.

The Regency Media Group has expanded over its 50 years in business to become a diversified group working in digital media manufacturing and distribution, licensing and publishing.  Fiona Horman is managing director of the privately owned company,and is one of Australia’s most experienced operators in the electronic media manufacturing sector.

Regency’s manufacturing customers include the world’s largest film studios and music businesses including Twentieth Century Fox, Icon, Madman, Warner Music, Hanabee, Acorn, EMI and most of the independent distributors.  The company is currently the second largest independent manufacturer of CDs/DVDs and Blu Rays in Australia.

By offering a full supply chain solution – manufacturing, warehousing, distribution and administration – Regency has established a sustainable competitive advantage.   It has also acquired other businesses in recent years, including a children’s book publisher.

 How Banjo helped

The Banjo team noted that Regency has a proven operating and financial track record and a reputation for speed to market, just in time delivery, accuracy and quality of product.

However, due to the wide range of payment terms of Regency’s clients, the company was experiencing a strain on its cashflow. Some of its distribution clients have 7 to 14-day terms, while retail chains have between 60 and 90 days.  Regency also exports to some American companies who have 120-day terms.

The whole working capital cycle is about 120 days to 180 days depending on which debtor places a bigger order at the time. Regency often finds themselves in a scenario where suppliers are requesting payment before their clients have paid.

Banjo was able to help with the working capital cycle of the business to fund the difference in cashflow needed.

“I’ve found dealing with Banjo very refreshing,” Horman said. “They are very quick to process and authorise requests. They make themselves available to talk directly to me as a client promptly and resolve any queries very quickly. They seem to understand business requirements for growth far better than standard bankers. It has been a delight dealing with Banjo for our funding needs.”

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