Did you know that in 2020 a decade’s worth of digital transformation occurred in the space of a few months? This was fuelled by the necessity for remote working, learning, shopping, healthcare, communication and entertainment – all of course due to the COVID pandemic.
In Australia, the magnitude of change in supply and demand over the last twelve months has led to some businesses seeing unprecedented growth, while others experienced rapid decline. Customer behaviour changed overnight, with e-commerce the key driver for businesses transformation.
The efficiency and survival of freight and logistics businesses is important to Australia’s productivity, with many other industries being reliant on the sector. Comprised of national logistics organisations and SMEs, the industry is growing at a rapid pace. Recent figures from SEEK show that manufacturing, transport and logistics are among the top industries for employment opportunities, with a 59% increase in job ads.
As Australia continues the long road to recovery, this is a promising sign that the job market is making progress and businesses have the opportunity for growth. From experience, we at Apricity Finance know that periods of growth can also deliver increased cash flow stress to small to medium businesses, particularly those whose customers are delaying invoice payments.
AUSTRALIA’S NEW TRADE AND INVESTMENT LANDSCAPE
According to the ‘Global Trade and Investment Megatrends’ report, published by Austrade, the pandemic resulted in global trade and investment contracting sharply with foreign investment directly into Australia shrinking by 40 per cent. However, while we are struggling with significant disruption to key industries such as tourism and higher education, our handling of the pandemic may deliver a competitive advantage.
In a world with little good news, it’s pleasing to note that Australia is being viewed as something of a ‘safe haven’ and this may present opportunities as global businesses attempt to move away from riskier assets and supply chains.
On the whole, we have managed to maintain reliable supply chains and a stable economy throughout the crisis. Household disposable income actually grew during the pandemic as people spent less money on commuting, holidays and entertainment, while many simultaneously received wage subsidies. Economic recovery is underway, and we are in a good position to capitalise on opportunities for growth.
To continue on the path to recovery, Australia now must embrace the new trade and investment landscape that emerges along with long-term technological shifts. This means continuing to innovate and respond rapidly with widespread digital transformation. Digital technologies such as IOT (Internet of Things) defined as objects that can be connected; sending, receiving, processing and storing information, will drive better efficiencies and better service to logistics processing. Planning and investment in digitisation and data science will help to grow export and import categories as well as improve local supply chains.
According to the Director of CSIRO’s Data61, Jon Whittle;
“Data science and technology will be crucial to drive our economic recovery and build our future resilience. Digital technologies, such as artificial intelligence, robotics and data science can help us create new sources of wealth generation for the nation and shift the dial for Australia on an international level.”
SO, WHAT DOES THIS MEAN FOR SMEs?
For many SMEs in the sector, innovation has been the key to surviving the past twelve months. Looking ahead, agility, continued innovation and investment in digital science is said to be the key to driving business growth. Future resilience to disruption should be at the forefront of business planning, so that exposed sourcing fragilities, disruptions to capacity and availability of freight services can be managed and mitigated.
The ‘Global Trade and Investment Megatrends’ report highlights the following opportunities for Australian businesses:
– Using AI, machine learning and data science to sharpen Australia’s trade and investment attraction strategy
– Boosting digitally enabled service exports
– Expanding and investing in Australia’s R&D capability
– Capitalising on Australia’s reputation as a safe destination for tourism and business
– Building a pandemic-proof education sector
– Boosting Australia’s Critical Minerals exports
– Expanding our food, agricultural and agri-tech exports
– Developing an export-earning disaster-resilience technology industry
– Developing trade and investment foresight capability, including risk analyses and scenario planning
At a time when many industries are still struggling, the Freight and Logistics sector in Australia is predicted to grow at a steady rate, driven by data science and e-commerce; as well as population growth and movement. Last year, Australians spent more than $50 billion online, with almost nine million households using e-commerce, many for the first time. We have seen growth in rail and road freight, despite state border closures and container delays and congestion at ports impacting deliveries. Investment in digitisation is already enabling supply and logistics businesses to transport more goods than ever before in a much more efficient and cost-effective manner.
COVID-19 has caused massive global disruption, changed consumer behaviour and created a need to consider new export strategies and supply chains to build international business resilience. For SMEs in the sector, it’s time to take stock, reset and look to opportunities for business growth in a rapidly changing world.
KEEPING AUSTRALIA’S LOGISTICS SECTOR MOVING
At Apricity Finance, we know first-hand the importance of working capital for businesses in transport and logistics. We recently facilitated growth for a client supplying rail infrastructure construction to medium to large scale multi-disciplined projects for light rail, metro, passenger, freight, heavy haul and crane rail in Australia and New Zealand.
The business was looking for a new finance provider, as they were changing their funding model from private to institutional investors. They needed a short-term funding solution as a stop-gap – and Apricity Finance was able to assist. Although the initial need for the facility is no longer an issue, our client has kept the facility open to provide an occasional short term cash boost as and when it’s needed.
CASH FLOW, THE GROWTH ENABLER
For those in the logistics business, be it shipping, trucking or warehousing, they are no doubt fully aware of the disparity between when work is completed, compared to the length of time it takes for customers to pay their invoices.
Businesses in the freight and logistics sector are at risk of cash flow problems due to the extended payment terms of their customers, which can sometimes reach up to 60 or 90 days. Very few businesses can afford to wait that long to be paid, as expenses, wages and other outgoing payments still need to be distributed on time.
One solution for SMEs in the sector struggling with cash flow problems is invoice finance. Invoice finance helps unlock business potential by closing the gap between the time customers are invoiced and when payment is received. Apricity Finance supports the specific growth needs of SMEs who supply goods or services to high-credit customers. With good cash flow and access to working capital, businesses are able to take on larger contracts and gain traction within the freight and logistics industry.
TALK TO AN INVOICE FINANCE SPECIALIST
Take control of your cashflow and manage your growth. Our invoice finance specialists will listen to your challenges and check your eligibility so you can access the funds you need to reach your business potential.