One Big Happy Family as Invoice Financing Deal Drives Tool Sales

A tool manufacturing business built on three generations of family dedication has hit new heights through strong hardware store sales and backed by a reliable source of funding.

A proud family business has built a reputation over more than 50 years as a trusted toolmaking manufacturer. With such a long history, it’s notable that in the past three years revenue has doubled. The “X” factor? Steady cashflow that comes from using a confidential funding arrangement with ScotPac.

Trading off hard-won status as a supplier of quality do-it-yourself and trade products, the enterprise signed a deal in 2017 to sell through Bunnings hardware stores. The move has seen the business, which has succeeded during three generations of family ownership, record its best results.

“We’ve doubled our business,” says family spokeswoman Carly*.

Strong sales and cash flow

While Bunnings sales have been a crucial driver of recent growth, including during the COVID-19 crisis when DIY projects soared, a second factor cannot be underestimated.

In 2018, the toolmaker discovered a reliable form of non-bank funding through a partnership with ScotPac that has unlocked opportunities, freed up cashflow and let the business shift away from bank loans that tied up family members’ personal property assets as security.

ScotPac’s confidential Invoice Financing facility acts as an on-demand and flexible line of credit secured by one or more outstanding sales invoices. This smart choice to leverage the value of the business’s strong receivables’ ledger has been a game-changer, converting invoices into a fast source of cashflow.

While the business had tried one other non-bank financing solution, Carly says it came with penalties for faster invoice payments. “We compared that with the ScotPac offer and it was just a no-brainer.”

The business felt that its long history and attention to accounting detail meant that it would be a good client for ScotPac, too. “We manage our debtors well and I’m sure ScotPac could see that we’re a well-organised business, so we represent a low risk to them.”

A constant flow of invoices through Bunnings and its parent company, Wesfarmers, also gave ScotPac the confidence to back its operations.

Right products at the right price

The business was set up in the late 1960s and a rebranding initiative about two decades ago first paved the way for a more focused and profitable enterprise.

It now supplies a range of reliable and affordable tools for both DIY enthusiasts and professional tradies, packaged and labelled to make it easier for customers to select the appropriate product for a job.

The family’s management team has always targeted continuous improvement, which is why it was open to adopting a new form of funding through ScotPac. “It’s been great for growth because as soon as you make a sale you can tap into the funds,” Carly says.

Adding to the mix has been a smooth onboarding and ongoing education process with ScotPac personnel providing on-site training and support as required. “They show you how the system works, and we’ve always had one relationship manager who knows our account and can sort things out if an issue pops up.”

All systems go

At the heart of the partnership with ScotPac has been clarity and regular communication about systems, processes and costs.

“When you’re dealing with a bank it’s usually very slow and cumbersome and there are lots of layers of bureaucracy,” Carly says. “We’ve found dealing with ScotPac much easier.”

Flexibility of funding has made a real difference. For example, as tool sales rose quickly on the back of a surge of DIY projects during COVID-19, the business knew it could negotiate increases to its facility limit with ScotPac, which has more than 30 years of experience lending exclusively to SMEs.

“It’s really good working with a partner who understands our business,” she says. “If and when we put more products into Bunnings or other retailers, we can go to ScotPac and tell them that we’re going to need more funding.”

That has been in contrast to former funding arrangements with major banks. “We had two bad experiences with big banks and it’s so refreshing to deal with a non-bank. With ScotPac, they understand their clients and can tailor a solution that meets our needs.”

Maximising business value

With the Bunnings alliance bedded down and funding secured through ScotPac, the toolmaker is confident that it can build on five decades of success and keep expanding.

“I just really see the business going onwards and upwards,” Carly says. “We just want to keep growing and becoming more efficient. Having strong cashflow because of ScotPac means we can have the products on the shelf ready to go.”

*This client story profiles a business that uses a confidential funding facility with ScotPac, so names have been changed for confidentiality.