Using faster payment to drive growth

The challenge

Although part of a larger, well-established group of companies, Odisee’s HVAC business was relatively new and experiencing a period of intense initial growth. It was important that this new business was able to self-fund this growth, which meant being as efficient as possible in its use of cash and minimising the amount that was tied up in accounts receivable.

Ideally, Odisee wanted to be paid upfront by its buyers so that incoming cash could be used to fund purchases of additional stock from its suppliers. At the same time, Odisee recognised that many of its buyers expected to be able to purchase on trade terms. Insisting on cash on delivery (COD) could drive customers to competitors who offered credit and this could limit potential growth.

Odisee explored a number of options for managing accounts receivable, none of which were a great fit for its needs. Bank funding would require offering security and other covenants. Traditional debtor financing would only pay a portion of outstanding invoices (typically 70%). Credit insurance came at a cost that was relatively unattractive. And all those options would require employing additional accounts receivable staff – a significant investment for an organisation intent on remaining lean and nimble.

The solution

When Odisee reached out to Shift, it quickly became apparent that Shift Trade was an ideal solution. By implementing Shift Trade, Odisee would receive next business day payment on every invoice and its customers would still be able to take advantage of attractive trade terms. The cost was very reasonable compared to the alternatives considered. And an added attraction was that Odisee would be free of any credit risk – all responsibility for credit assessment and payment collection could be outsourced to Shift. This would give Odisee absolute certainty over its income and the timing of payment.

The results

The primary objective for Odisee was to accelerate the cash conversion cycle to enable faster growth. And on this measure, Shift Trade delivered exactly what was needed. Odisee is now receiving payment within days on all invoiced sales and is immediately turning this incoming cash into purchases of additional stock. This ability to more rapidly restock is fuelling additional sales which is driving exponential growth for the business. From a standing start, Shift processed more than $600,000 in sales in only the second month following implementation.

Some of Odisee’s customers have seen the benefits of Shift Trade and have gone on to implement Shift Trade into their own businesses. Odisee’s customers are typically installers and tradespeople who are also looking for ways to optimise their cash flow. A number of them have already implemented Shift Trade so they can receive upfront payment for their work while offering trade terms to their customers.

A final word

In addition to providing an efficient solution to its core cash flow objective, Odisee has found Shift to be a partner for growth. The initial setup process was seamless with the Odisee account up-and-running within days. This was particularly important given, at the time of engagement, the company was headed into summer, the busiest time of the year. The relationship has been extremely hands-on throughout, with the Shift team always available to talk through the onboarding of new customers and to discuss credit limits.

Shift has become an extension to Odisee’s business and has played a critical part in our sales growth over the last two years. Our customers find the application process easy and have enjoyed the speed of their own volume growth through the financial support of Shift.

The staff at Shift are professional and very knowledgeable of their product, and with the growth of our customers’ credit on their platform we expect to have further growth off the back of our partnership.”