Overcoming growing pains by enlisting Shift Trade
$52,000
Average credit limit per customer
The average credit limit offered to Alpha Timber customers by Shift is $52,000.
24%
Transaction volume growth
Alpha Timber customers completed 24% more transactions in the six months after they opened a Shift Trade account than in the six months before.
31%
Transaction value growth
The value of the transactions completed by Alpha Timber customers was 31% more in the six months after they opened a Trade account than in the six months prior.
The client
Alpha Timber is a supplier of structural timber to carpenters and builders in Sydney. They launched in 2017 with a focus on quality service and on-time delivery. By maintaining an unwavering commitment to excellent service, their aim is to be one of Australia’s leading timber suppliers.
The challenge
Alpha Timber experimented with providing trade terms to clients in the early stages of building its business and found it challenging. Late payments and bad debts created serious cash flow concerns for the young business. They recognised that managing credit risk was not a core competency and wanted to withdraw from offering credit altogether. At the same time, they recognised that insisting on cash on delivery (COD) could lead to lost customers and sales.
The solution
Recognising the value of specialist expertise, Alpha Timber engaged Shift to use its trade credit program. Alpha Timber’s focus was on solving three key challenges:
Shift implemented a trade credit program that became the default for all new customers. Upon sign-up, customers were able to choose between paying cash or paying on 30-day terms through Shift Trade. The sign-up process was streamlined and Shift took responsibility for all credit assessment and payment collection.
Alpha Timber received next business day payment on every invoice, bringing predictability to cash flow and reducing the cost and effort of managing accounts receivable.
The results
It was a pivotal moment for Alpha Timber. Before the implementation of Shift Trade, credit losses and uncertain cash flow were putting serious strain on the long-term viability of the business. Since implementation, the business has gone from strength-to-strength.
Sales growth since implementation has been in excess of 30%. This growth came from two key sources:
- The right credit offering has enabled Alpha Timber to attract more of the right kinds of new customers.
- Competitive credit limits and trade terms have increased the average order value and purchase frequency from existing customers.
A final word
Shift now processes around $300,000 per month of transactions on behalf of Alpha Timber. There are still many customers who choose to pay COD but the choice is entirely theirs – putting the customer in control. And regardless of customer preference, Alpha Timber receives payment immediately. This complete control over its cash flow has enabled Alpha Timber to negotiate better terms with its own suppliers, further improving its financial position.
Implementing Shift Trade was a game-changer. It allowed us to offer our customers 30-day terms at a time when we were still building our business and needed every dollar to invest in our growth. Since then, our business has gone from strength-to-strength but we still find Shift Trade the most efficient and cost-effective way to offer payment flexibility to our customers.”