After nearly two years of Australia locking out the rest of the world due to COVID-19 fears, our borders will finally reopen to fully vaccinated international travellers on February 21. This reopening should have major benefits to the economy, including businesses in the wholesale and manufacturing sectors.
Read on to find out everything you need to know to capitalise on the reopening.
The benefits to the economy
The border reopening should quickly see approximately 200,000 visa holders enter the country as tourists and students, as well as skilled workers to help cover the skill shortage. There will be flow-on effects in terms of increased demand for Australian goods and services in many industries as a result.
One study has estimated that Australia’s international border closures due to COVID-19 fears have cost the economy $36.5 million each day. The tourism sector has been especially hard hit, with a recent Tourism Australia report revealing that the sector lost $80 billion in revenue in 2020 alone.
What wholesale and manufacturing businesses need to do
The impact of the border reopening will affect different industries in different ways, but if you’re in wholesaling or manufacturing, you’ll likely need to stock up on supplies ready for demand from tourism to pick up. The increased demand will quickly flow through the supply chain, and if you can’t supply your B2B customers, they will quickly find others who can.
If you don’t have much working capital to invest in ramping up your capacity and stock levels, there are simple business finance solutions available, including:
- trade finance,
- invoice finance, and
- asset and equipment finance.
Let’s briefly look at each option in turn.
If you’re a wholesaler needing to get more products from local or international manufacturers, trade finance can help you pay for the goods upfront, without the pressure of having to sell them first to be able to pay your supplier.
It can also allow you to negotiate better prices with your suppliers or manufacturers by paying upfront and buying larger quantities, increasing your profit margin. While stocking up on inventory can cause other cash flow issues, the risk of buying larger quantities should be reduced with the increased demand generated by Australia’s border reopening.
The potential benefits of trade finance are the same for manufacturers looking to source raw materials from suppliers.
Invoice finance complements trade finance by providing you with a line of credit that grows as your unpaid invoices grow. If your wholesaling or manufacturing business offers your business customers credit (like 30-day accounts, etc.), then you can access cash from these invoices straight away by using invoice finance (even before your customers have paid). This will boost your cash flow, allowing you to boost your inventory to sell more as your customer demand picks up.
Asset and equipment finance
If you need new or improved assets and equipment to ramp up your business capacity as demand increases, then asset and equipment finance might be the answer. It’s also a great time to buy new (or used) business assets and equipment, because the government’s temporary full expensing scheme is available. It allows eligible businesses to write off the full cost of new or second-hand assets as a tax deduction in the year they are purchased.
While the industry that will obviously see increased demand is tourism, if you’re in the wholesale and manufacturing sector, it’s important to think further up the supply chain and gear up for the increased demand you’ll likely receive when our international borders reopen.
Earlypay has supported Australian SMEs with fast and flexible alternative funding solutions for more than 20 years. Our invoice finance, asset finance and trade finance products allow business owners to proactively manage their cash flow, freeing up their working capital for investing in growth. To chat about whether our solutions could be suitable for your business, call us on 1300 760 205.