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How CommBank and Waddle, from Xero, are unlocking cash in unpaid invoices to help small business grow

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Simon Creighton

Feb 6, 2023

Amid stubborn global inflation, tightening monetary policy and ongoing energy and supply chain impacts, it’s important for small businesses to look at how they’re managing their cash flow.  

Cash flow is king again and freeing up cash could be the difference for many in the year ahead. It’s likely many small businesses have a lot of capital tied up in receivables and inventory that they could turn into cash, something Waddle, a Xero company, and Commonwealth Bank of Australia (CommBank) are solving with Stream Working Capital

In June 2021, CommBank developed Stream Working Capital in partnership with Waddle to give businesses access to funds using their outstanding invoices as loan security. Fast forward to today and CommBank’s digital lending solution has empowered customers around Australia with faster access to cash flow to help run their business and accelerate growth.

I had the opportunity to catch up with CommBank’s General Manager for Working Capital, Elizabeth Huxley, to discuss the rollout of Stream Working Capital, how it can help small businesses facing tougher economic realities and what’s next in the CommBank and Waddle partnership.

Navigating supply chain issues with working capital

During 2021, small businesses were contesting with bare shelves brought on by global supply chain bottlenecks and unprecedented consumer demand fuelled by COVID-19 lockdowns. Two years on and small businesses are moving away from the ‘once-loved, just-in time-inventory model’ and buying more stock earlier than anticipated to mitigate supply chain disruption.

CommBank customer data reveals that businesses are holding onto inventory on average four months before selling. The cash conversion cycle – the time it takes to convert investments in inventory into cash – has increased from 55 days in 2020 to more than 100 days in 2022. At the same time, suppliers are requesting earlier payments to remain within credit insurance limits.

High receivables and high inventories mean that a lot of cash is locked up in working capital, which has led to an increase in demand for working capital finance solutions, explains Elizabeth. 

“We heard from customers that they want to hold onto more inventory and build relationships with more suppliers to mitigate supply chain disruption. They also face increasing pressure from suppliers wanting to be paid earlier and buyers wanting to extend payment terms.”

Stream Working Capital is making access to finance quick, easy and affordable for businesses. It’s helping them smooth out their day-to-day cash flow, helping pay suppliers, staff and bills earlier – or at least on time. It can also help them rapidly respond to new business opportunities.”

This was particularly helpful for Brisbane-based business PromoGear. When corporate events resumed in 2022, the businesses faced a sudden influx of larger clients bringing in larger contracts. Demand for Rapid Antigen Kits (RATs) had jumped and using Stream Working Capital, PromoGear was able to access instant finance to secure an ongoing supply of RATs and fund its growth.

Moving away from traditional forms of lending

In Australia, small businesses have generally relied on traditional credit to meet cash flow needs, using fixed assets such as residential or commercial property to secure their loan. Now a growing number of small business leaders are embracing alternative forms of lending, including Jarrod McGrath, founder and CEO of global human capital management consultancy, Smart WFM

Jarrod needed working capital to bridge the 90 to 120 day gap when hiring new staff and receiving a cash return on a new hire. However, his existing invoice financer charged 30% interest, so Jarrod would avoid drawing down on his facility unless he absolutely had to, affecting his ability to grow.

Stream Working Capital puts customers like Jarrod in control of how and when they use the facility. Businesses are only charged interest on the funds they’ve drawn down,” noted Elizabeth.

Cash flow that is flexible, fast, and simple

For small business customers, Waddle’s technology helps to make the Stream Working Capital application process and in-life management of a loan fast, simple and easy. When applying, a customer simply has to agree to share their accounting and financial data with the Stream Working Capital platform and assuming the right criteria are met, instantly they have an indicative offer.  CommBank has most of the information needed to make a credit decision. 

As Elizabeth explains, “Stream Working Capital has been giving small businesses back time to run their business and not having to deal with endless paperwork to apply and manage their loan.” 

What’s next for Stream Working Capital?

According to Elizabeth, CommBank and Waddle are just getting started. 

CommBank and Waddle have been in partnership for 18 months and we’re just getting started. We have plans to evolve Stream Working Capital by adding new features to the platform, to continue to make our customers’ lives simple and easy when it comes to securing finance for their business. 

Learn more about Waddle From Xero and Stream Working Capital.

This information is prepared without taking into account your individual and/or business needs and objectives.

Credit provided by the Commonwealth Bank of Australia. Stream Working Capital product is only available to approved business customers and for business purposes only. Applications for finance are subject to CommBank’s eligibility and suitability criteria and normal credit approval processes. The minimum value of nominated invoices is $15,000 per month. A minimum facility limit of $50,000 or more applies to Stream Working Capital. CommBank will require your consent to access your accounting software to assess your application and manage your account going forward. Full terms and conditions, interest rate, establishment fee and line fee are included in the Loan Offer, you should consider these before making any decisions about these products. Bank fees and charges may apply.

To use Stream Working Capital you’ll need to open or switch to a CommBank Stream Working Capital Transaction Account if your application is approved. Fees and charges for this account are in addition to those associated with any existing business transaction product. For the Stream Working Capital Transaction Account view CommBank’s Business Savings and Transaction Accounts Terms and Conditions, Financial Services Guide, the Electronic Banking Terms and Conditions and the Target Market Determination, you should consider these before making any decisions about these products. Bank fees and charges may apply. View CommBank’s current interest rates.

Commonwealth Bank of Australia ABN 48 123 123 124 and Australian credit licence 234945.

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