The Australian mining industry accounts for 75% of the country’s exports with $160 billion total net worth and is a leading influence on the standard of living, rising incomes and flourishing economy. With 1.2 million employed in the resources workforce, the industry accounts for 8% of the gross domestic product (GDP). As the fourth largest mining country in the world, Australia is the world’s largest producer of lithium and a global top five producer of gold, iron ore, lead, zinc, and nickel.
Growth in the Australian mining sector is expected to be driven by two things - continued global demand for iron ore and growth in the critical minerals sector to support clean energy targets.
What does this mean for SMEs in the mining industry?
Faced with a unique set of challenges from fluctuating commodities prices to the sheer scale and scope of projects, typically there is almost always a significant outlay of funds by the business upfront to increase staff numbers, purchase or hire equipment. This can be a tenuous situation if you are a smaller operator, especially as there may be a long wait before the payment of your first invoice is received.
The key to successful growth is having good cash flow and avoiding debt - this is where an invoice finance facility can be powerful.
We are a mining services business supplying labour and engineering services to the underground coal mining industry in NSW and QLD.
The biggest issue we have as a business is cash flow. We have a large workforce of employees that are paid weekly, and our accounts are paid by our customers 30 to 60 days after they are issued. This can leave a big gap between cash going out of the business and cash coming back in. Despite careful planning and forecasting on our part, the nature and scale of our projects can sometimes mean we experience significant cash flow stress.
We recently won the contract for a large project at a new mine and were struggling to find the initial funding to commence, as we needed a workforce in place straight away. The Apricity Invoice Finance facility provided a great solution for us as we were able to access the capital from our initial invoices immediately. This effectively eliminated the need to borrow, putting the business into a cash positive position and allowing us to stay ahead throughout the project.